Crocs, Inc. Reports Record Second Quarter Revenues and Raises Full Year 2024 Earnings Per Share Outlook

Rhea-AI Summary

Crocs, Inc. (NASDAQ: CROX) reported record second quarter results for 2024, with revenues increasing 3.6% to $1,112 million. The Crocs Brand saw strong growth, especially internationally, while HEYDUDE faced challenges. Key highlights include:

- Diluted EPS up 11.2% to $3.77
- Adjusted diluted EPS up 11.7% to $4.01
- Gross margin improved to 61.4%
- Crocs Brand revenues increased 9.7% to $914 million
- HEYDUDE Brand revenues decreased 17.5% to $198 million

The company raised its full-year 2024 earnings per share outlook and maintained revenue guidance. Crocs expects revenue growth of 3-5% for 2024 and adjusted diluted EPS of $12.45 to $12.90.

Positive

• Record second quarter revenues of $1,112 million, up 3.6% year-over-year
• Diluted EPS increased 11.2% to $3.77
• Adjusted diluted EPS rose 11.7% to $4.01
• Gross margin improved 330 basis points to 61.4%
• Crocs Brand revenues grew 9.7% to $914 million
• International revenues for Crocs Brand increased 18.7%
• Company raised full-year 2024 earnings per share outlook
• Repaid $200 million of debt during the quarter

Negative

• HEYDUDE Brand revenues decreased 17.5% to $198 million
• Wholesale revenues contracted 1.3% overall
• SG&A expenses increased 17.6% to $356 million
• HEYDUDE Brand wholesale revenues decreased 23.5%
• Expected revenue decline for HEYDUDE Brand in Q3 2024 and full-year 2024

Insights

Financial Analyst

Crocs' Q2 2024 results demonstrate robust performance, particularly in the Crocs brand segment. The 4% year-over-year revenue increase to $1,112 million and 11% growth in diluted EPS to $3.77 showcase the company's resilience in a challenging retail environment.

Key highlights include:

• Crocs brand revenue growth of 9.7%, driven by strong international performance (18.7% increase)
• Impressive gross margin expansion of 330 basis points to 61.4%
• Continued debt reduction ($200 million repaid) and share repurchases ($175 million)

However, the HEYDUDE brand's 17.5% revenue decline is concerning and warrants close monitoring. The company's focus on marketing acceleration for HEYDUDE in H2 2024 will be important for reversing this trend.

The raised full-year EPS guidance ($12.45 to $12.90) reflects management's confidence in the company's trajectory. Investors should note the strong cash flow generation, which provides flexibility for reinvestment, debt reduction and share repurchases.

Overall, Crocs' ability to maintain revenue guidance while increasing profitability expectations is a positive sign, but the performance disparity between the Crocs and HEYDUDE brands remains a key area to watch.

Market Research Analyst

Crocs' Q2 results reveal intriguing market dynamics. The Crocs brand's 9.7% revenue growth, particularly the 18.7% international surge, suggests strong global appeal and effective market penetration strategies. This contrasts sharply with HEYDUDE's 17.5% decline, indicating potential brand positioning or product-market fit issues.

Channel performance is noteworthy:

• Crocs brand DTC revenues up 12.5%, outpacing wholesale (6.9% growth)
• HEYDUDE's wholesale revenues down 23.5%, significantly more than DTC's 7.6% decline

These trends suggest a shift towards direct consumer engagement for Crocs, while HEYDUDE faces challenges in retail partnerships. The planned marketing acceleration for HEYDUDE in H2 2024 will be critical to address these issues.

Inventory management appears strong, with levels down from $436 million to $377 million year-over-year, indicating improved operational efficiency and potentially healthier sell-through rates.

The company's ability to raise operating margin guidance while maintaining revenue projections suggests effective cost management and pricing strategies. However, the divergent performance between brands highlights the need for a nuanced, brand-specific approach to market strategy and resource allocation.

• Second Quarter Revenues Increased 4% Over Last Year To $1,112 Million
• Second Quarter Diluted EPS Up 11% to $3.77 and Adjusted Diluted EPS Up 12% to $4.01

BROOMFIELD, Colo., Aug. 1, 2024 /PRNewswire/ -- Crocs, Inc. (NASDAQ: CROX), a world leader in innovative casual footwear for all, today announced its second quarter 2024 financial results.

"We reported record second quarter results on both the top and bottom line which exceeded our guidance on all Enterprise metrics," said Andrew Rees, Chief Executive Officer. "Strength in the quarter was led by our Crocs Brand with exceptional growth internationally. As it relates to HEYDUDE, we are making improvements to support long-term brand health and are focused on driving brand heat by accelerating marketing in the second half of the year."

Mr. Rees continued, "Based on the strength of our second quarter, we are lifting our operating margin and earnings per share outlook for the fiscal year while maintaining our revenue guidance. Our terrific cash flow generation provides us the flexibility to reinvest in our business, pay down debt and repurchase shares."

Amounts referred to as "Adjusted" or "Non-GAAP" are Non-GAAP measures and include adjustments that are described under the heading "Reconciliation of GAAP Measures to Non-GAAP Measures." A reconciliation of these amounts to their GAAP counterparts are contained in the schedules below.

Second Quarter 2024 Operating Results (Compared to the Same Period Last Year)

• Consolidated revenues were $1,112 million, an increase of 3.6%, or 4.8% on a constant currency basis. Direct-to-consumer ("DTC") revenues grew 8.9%, or 10.0% on a constant currency basis. Wholesale revenues contracted 1.3%, flat on a constant currency basis.
• Gross margin was 61.4% compared to 57.9%. Adjusted gross margin improved 330 basis points to 61.4% compared to 58.1%.
• Selling, general, and administrative expenses ("SG&A") of $356 million increased 17.6% from $303 million, and represented 32.0% of revenues. Adjusted SG&A of $356 million increased 19.4% from $298 million, and represented 32.0% of revenues.
• Income from operations of $326 million increased 2.3% from $318 million, resulting in operating margin of 29.3%. Adjusted income from operations of $326 million increased 0.4% from $325 million, resulting in adjusted operating margin of 29.3%.
• Diluted earnings per share of $3.77 increased 11.2% from $3.39. Adjusted diluted earnings per share of $4.01 increased 11.7% from $3.59.
• During the quarter, we repaid $200 million of debt. We repurchased approximately 1.2 million shares for $175 million, and at quarter end, $700 million of share repurchase authorization remained available for future repurchases.

Second Quarter 2024 Brand Summary

• Crocs Brand: Revenues increased 9.7% to $914 million, or 11.2% on a constant currency basis.
  • Channel
    • DTC revenues increased 12.5% to $479 million, or 13.8% on a constant currency basis.
    • Wholesale revenues increased 6.9% to $435 million, or 8.6% on a constant currency basis.
  • Geography
    • North America revenues increased 3.0% to $489 million, or 3.2% on a constant currency basis.
    • International revenues increased 18.7% to $425 million, or 22.0% on a constant currency basis.
• HEYDUDE Brand: Revenues decreased 17.5% to $198 million.
  • Channel
    • DTC revenues decreased 7.6% to $84 million.
    • Wholesale revenues decreased 23.5% to $114 million.

 Balance Sheet and Cash Flow (June 30, 2024 as compared to June 30, 2023)

• Cash and cash equivalents were $168 million compared to $166 million.
• Inventories were $377 million compared to $436 million.
• Total borrowings were $1,530 million compared to $2,027 million.
• Capital expenditures were $33 million compared to $52 million.

Financial Outlook

Third Quarter 2024

With respect to the third quarter of 2024, we expect:

• Revenues to be down 1.5% to up 0.5% compared to third quarter 2023, at currency rates as of the end of the last reported period.
  • Crocs Brand to grow 3% to 5% compared to third quarter 2023.
  • HEYDUDE Brand to be down 16% to 14% compared to third quarter 2023.
• Adjusted operating margin of approximately 24.5%.
• Adjusted diluted earnings per share of $2.95 to $3.10.

Full Year 2024

With respect to 2024, we expect:

• Revenue growth of 3% to 5% compared to 2023, at currency rates as of the end of the last reported period.
  • Revenues for the Crocs Brand to grow approximately 7% to 9%.
  • Revenues for the HEYDUDE Brand to be down approximately 10% to 8%.
• Adjusted operating margin of more than 25% compared to prior guidance of approximately 25%.
•  Non-GAAP adjustments of approximately $28 million related to the implementation of a new enterprise resource planning ("ERP") system for HEYDUDE, and costs to transition to our new HEYDUDE distribution center in Las Vegas, Nevada.
• Combined GAAP tax rate of approximately 21.5% and non-GAAP effective tax rate of approximately 18.0%.
• Adjusted diluted earnings per share of $12.45 to $12.90 compared to prior guidance of $12.25 to $12.73. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
• Capital expenditures of $100 million to $110 million compared to prior guidance of $120 million to $130 million.

Conference Call Information

A conference call to discuss second quarter 2024 results is scheduled for today, Thursday, August 1, 2024, at 8:30 am ET. To receive conference call details, please register at the Investor Relations section of the Crocs website, investors.crocs.com. The webcast will also be available live and on replay through August 1, 2025 at this site.

About Crocs, Inc.:

Crocs, Inc. (Nasdaq: CROX), headquartered in Broomfield, Colorado, is a world leader in innovative casual footwear for all, combining comfort and style with a value that consumers know and love. The Company's brands include Crocs and HEYDUDE, and its products are sold in more than 80 countries through wholesale and direct-to-consumer channels. For more information on Crocs, Inc. visit investors.crocs.com. To learn more about our brands, visit www.crocs.com or www.heydude.com. Individuals can also visit https://investors.crocs.com/news-and-events/ and follow both Crocs and HEYDUDE on their social platforms.

Forward Looking Statements

This press release includes estimates, projections, and statements relating to our business plans, commitments, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

These statements include, but are not limited to, statements regarding potential impacts to our business related to cost inflation, our financial condition, brand and liquidity outlook, and expectations regarding our future financial results, share repurchases, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, statements regarding third quarter and full year 2024 financial outlook and future profitability, cash flows, and brand strength, anticipated product portfolio and our ability to deliver sustained, highly profitable growth and create significant shareholder value. 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: cost inflation; current global financial conditions; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenues; changing consumer preferences; 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 only as of August 1, 2024. We do not undertake any obligation to update publicly any forward-looking statements, whether as a result of the receipt of new information, future events, or otherwise, except as required by applicable law.

Category:Investors

CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (in thousands, except per share data)
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues	$                1,111,502		$                1,072,367		$                2,050,135		$                1,956,533
Cost of sales	429,586		451,060		846,142		858,856
Gross profit	681,916		621,307		1,203,993		1,097,677
Selling, general and administrative expenses	356,178		302,818		651,826		544,260
Income from operations	325,738		318,489		552,167		553,417
Foreign currency gains (losses), net	(1,323)		551		(3,596)		148
Interest income	1,126		548		1,542		719
Interest expense	(29,161)		(43,063)		(59,724)		(85,700)
Other income, net	45		717		65		424
Income before income taxes	296,425		277,242		490,454		469,008
Income tax expense	67,518		64,830		109,093		107,053
Net income	$                   228,907		$                   212,412		$                   381,361		$                   361,955
Net income per common share:
Basic	$                          3.79		$                          3.42		$                          6.31		$                          5.84
Diluted	$                          3.77		$                          3.39		$                          6.26		$                          5.78
Weighted average common shares outstanding:
Basic	60,320		62,037		60,442		61,937
Diluted	60,766		62,603		60,910		62,616

 

CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and par value amounts)
	June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$          167,734		$          149,288
Restricted cash - current	2		2
Accounts receivable, net of allowances of $34,899 and $27,591, respectively	420,199		305,747
Inventories	376,599		385,054
Income taxes receivable	2,502		4,413
Other receivables	20,282		21,071
Prepaid expenses and other assets	39,586		45,129
Total current assets	1,026,904		910,704
Property and equipment, net of accumulated depreciation of $133,215 and $120,510, respectively	244,067		238,315
Intangible assets, net of accumulated amortization of $150,026 and $138,611, respectively	1,785,303		1,792,562
Goodwill	711,542		711,588
Deferred tax assets, net	640,587		667,972
Restricted cash	3,292		3,807
Right-of-use assets	292,089		287,440
Other assets	16,014		31,446
Total assets	$       4,719,798		$       4,643,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$          244,853		$          260,978
Accrued expenses and other liabilities	285,095		285,771
Income taxes payable	92,550		65,952
Current borrowings	—		23,328
Current operating lease liabilities	63,918		62,267
Total current liabilities	686,416		698,296
Deferred tax liabilities, net	12,841		12,912
Long-term income taxes payable	557,581		565,171
Long-term borrowings	1,529,566		1,640,996
Long-term operating lease liabilities	277,112		269,769
Other liabilities	3,071		2,767
Total liabilities	3,066,587		3,189,911
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.001 per share, 250.0 million shares authorized, 110.3 million and 110.1 million issued, 59.6 million and 60.5 million outstanding, respectively	110		110
Treasury stock, at cost, 50.8 million and 49.6 million shares, respectively	(2,071,289)		(1,888,869)
Additional paid-in capital	844,595		826,685
Retained earnings	2,993,126		2,611,765
Accumulated other comprehensive loss	(113,331)		(95,768)
Total stockholders' equity	1,653,211		1,453,923
Total liabilities and stockholders' equity	$       4,719,798		$       4,643,834

 

CROCS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$                    381,361		$                 361,955
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,705		25,780
Operating lease cost	40,654		36,592
Share-based compensation	17,744		15,852
Asset impairment	24,081		—
Other non-cash items	18,517		769
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable	(119,159)		(113,838)
Inventories	5,172		34,884
Prepaid expenses and other assets	2,247		(32,413)
Accounts payable, accrued expenses and other liabilities	(19,034)		27,819
Right-of-use assets and operating lease liabilities	(42,069)		(35,176)
Income taxes	30,443		8,389
Cash provided by operating activities	373,662		330,613
Cash flows from investing activities:
Purchases of property, equipment, and software	(32,806)		(51,645)
Cash used in investing activities	(32,806)		(51,645)
Cash flows from financing activities:
Proceeds from borrowings	78,156		214,634
Repayments of borrowings	(216,405)		(513,703)
Deferred debt issuance costs	(1,173)		(612)
Repurchases of common stock	(175,011)		—
Repurchases of common stock for tax withholding	(5,913)		(11,636)
Other	168		—
Cash used in financing activities	(320,178)		(311,317)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(2,747)		7,049
Net change in cash, cash equivalents, and restricted cash	17,931		(25,300)
Cash, cash equivalents, and restricted cash—beginning of period	153,097		194,885
Cash, cash equivalents, and restricted cash—end of period	$                    171,028		$                 169,585

 

CROCS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America ("GAAP"), we present "Non-GAAP gross profit," "Non-GAAP gross margin," "Non-GAAP gross margin by brand," "Non-GAAP selling, general, and administrative expenses," "Non-GAAP selling, general and administrative expenses as a percent of revenues," "Non-GAAP income from operations," "Non-GAAP operating margin," "Non-GAAP operating margin by brand," "Non-GAAP income before income taxes," "Non-GAAP income tax expense," "Non-GAAP effective tax rate," "Non-GAAP net income," and "Non-GAAP basic and diluted net income per common share," which are non-GAAP financial measures. We also present future period guidance for "Non-GAAP operating margin," "Non-GAAP income from operations," "Non-GAAP effective tax rate," and "Non-GAAP diluted earnings per share." Non-GAAP results 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.

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 GAAP. Constant currency represents current period results that have been retranslated using exchange rates used in the prior year comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.

Management uses non-GAAP results to assist in comparing business trends from period to period on a consistent basis in communications with the board of directors, stockholders, analysts, and investors concerning our financial performance. We believe that these non-GAAP measures, in addition to corresponding GAAP measures, are useful to investors and other users of our condensed consolidated financial statements as an additional tool for evaluating operating performance and trends by providing meaningful information about operations compared to our peers by excluding the impacts of various differences.

Management believes Non-GAAP gross profit, Non-GAAP gross margin, and Non-GAAP gross margin by brand are useful performance measures for investors because they provide investors with a means of comparing these measures between periods without the impact of certain expenses that we believe are not indicative of our routine cost of sales. Our routine cost of sales includes core product costs and distribution expenses primarily related to receiving, inspecting, warehousing, and packaging product and transportation costs associated with delivering products from distribution centers. Costs not indicative of our routine cost of sales may or may not be recurring in nature and include costs to expand and transition to new distribution centers.

Management believes Non-GAAP selling, general and administrative expenses and Non-GAAP selling, general and administrative expenses as a percent of revenues are useful performance measures for investors because they provide a more meaningful comparison to prior periods and may be indicative of the level of such expenses to be incurred in future periods. These measures exclude the impact of certain expenses not related to our normal operations, such as costs related to the integration of HEYDUDE and other costs that are expected to be non-recurring in nature.

Non-GAAP income from operations, Non-GAAP operating margin, and Non-GAAP operating margin by brand reflect the impact of Non-GAAP gross profit and Non-GAAP selling, general, and administrative expenses, as discussed above. We believe these are useful performance measures for investors because they provide a useful basis to compare performance in the period to prior periods.

Non-GAAP income before income taxes reflects the impact of Non-GAAP income from operations, as discussed above. We believe this is a useful performance measure for investors because it provides a useful basis to compare performance in the period to prior periods.

Management believes Non-GAAP income tax expense is a useful performance measure for investors because it provides a basis to compare our tax rates to historical tax rates, and because the adjustment is necessary in order to calculate Non-GAAP net income.

Management believes Non-GAAP effective tax rate is a useful performance measure for investors because it provides an ongoing effective tax rate that they can use for historical comparisons and forecasting.

Management believes Non-GAAP net income is a useful performance measure for investors because it focuses on underlying operating results and trends and improves the comparability of our results to prior periods. This measure reflects the impact of Non-GAAP gross profit, Non-GAAP selling, general, and administrative expenses, and Non-GAAP income tax expense, as described above.

Management believes Non-GAAP basic and diluted net income per common share are useful performance measures for investors because they focus on underlying operating results and trends and improve the comparability of our results to prior periods. These measures reflect the impact of Non-GAAP gross profit, Non-GAAP selling, general, and administrative expenses, and Non-GAAP income tax expense, as described above.

For the three and six months ended June 30, 2024, management believes it is helpful to evaluate our results excluding the impacts of various adjustments relating to special or non-recurring items. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

CROCS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)
Non-GAAP gross profit and gross margin reconciliation:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
GAAP revenues	$            1,111,502		$            1,072,367		$                2,050,135		$            1,956,533
GAAP gross profit	$               681,916		$               621,307		$              1,203,993		$            1,097,677
Distribution centers (1)	—		1,586		3,242		4,867
Non-GAAP gross profit	$               681,916		$               622,893		$              1,207,235		$            1,102,544
GAAP gross margin	61.4 %		57.9 %		58.7 %		56.1 %
Non-GAAP gross margin	61.4 %		58.1 %		58.9 %		56.4 %

(1)	During the six months ended June 30, 2024, adjustments primarily relate to costs to transition to our new HEYDUDE distribution center in Las Vegas, Nevada. During the three and six months ended June 30, 2023, adjustments represent expenses, including expansion costs and duplicate rent costs, related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada.

 

Non-GAAP gross margin reconciliation by brand:
Crocs Brand:
	Three Months Ended June 30,
	2024		2023
GAAP Crocs Brand gross margin	64.1 %		61.9 %
Non-GAAP adjustments:
Distribution centers (1)	— %		0.1 %
Non-GAAP Crocs Brand gross margin	64.1 %		62.0 %

(1)	Represents prior year expenses, including expansion costs and duplicate rent costs, primarily related to our distribution centers in Dayton, Ohio.

 

HEYDUDE Brand:
	Three Months Ended June 30,
	2024		2023
GAAP HEYDUDE Brand gross margin	49.1 %		47.1 %
Non-GAAP adjustments:
Distribution centers	— %		less than 0.1%
Non-GAAP HEYDUDE Brand gross margin	49.1 %		47.1 %

 

Non-GAAP selling, general and administrative reconciliation:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
GAAP revenues	$            1,111,502		$            1,072,367		$            2,050,135		$            1,956,533
GAAP selling, general and administrative expenses	$               356,178		$               302,818		$               651,826		$               544,260
Impairment related to information technology systems (1)	—		—		(18,172)
Impairment related to distribution centers (2)	—		—		(6,933)
Information technology project discontinuation	—		—		—		(4,119)
HEYDUDE integration costs	—		(130)		—		(1,416)
Duplicate headquarters rent (3)	—		(1,126)		—		(2,193)
Other (4)	—		(3,248)		—		(5,608)
Total adjustments	—		(4,504)		(25,105)		(13,336)
Non-GAAP selling, general and administrative expenses (5)	$               356,178		$               298,314		$               626,721		$               530,924
GAAP selling, general and administrative expenses as a percent of revenues	32.0 %		28.2 %		31.8 %		27.8 %
Non-GAAP selling, general and administrative expenses as a percent of revenues	32.0 %		27.8 %		30.6 %		27.1 %

(1)	Represents an impairment of information technology systems related to the HEYDUDE integration.
(2)	Primarily represents an impairment of the right-of-use assets for our former HEYDUDE Brand warehouses in Las Vegas, Nevada associated with our move to our new distribution center and an impairment of the right-of-use asset for our former Crocs Brand warehouse in Oudenbosch, the Netherlands.
(3)	Represents duplicate rent costs associated with our move to a new headquarters.
(4)	Includes various restructuring costs, as well as costs associated with the implementation of a new enterprise resource planning system.
(5)	Non-GAAP selling, general and administrative expenses are presented gross of tax.

 

Non-GAAP income from operations and operating margin reconciliation:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
GAAP revenues	$           1,111,502		$           1,072,367		$           2,050,135		$           1,956,533
GAAP income from operations	$              325,738		$              318,489		$              552,167		$              553,417
Non-GAAP gross profit adjustments (1)	—		1,586		3,242		4,867
Non-GAAP selling, general and administrative expenses adjustments (2)	—		4,504		25,105		13,336
Non-GAAP income from operations	$              325,738		$              324,579		$              580,514		$              571,620
GAAP operating margin	29.3 %		29.7 %		26.9 %		28.3 %
Non-GAAP operating margin	29.3 %		30.3 %		28.3 %		29.2 %

(1)	See 'Non-GAAP gross profit and gross margin reconciliation' above for more details.
(2)	See 'Non-GAAP selling, general and administrative expenses and selling, general and administrative expenses as a percent of revenues reconciliation' above for more details.

 

Non-GAAP income tax expense (benefit) and effective tax rate reconciliation:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands)
GAAP income from operations	$              325,738		$              318,489		$              552,167		$              553,417
GAAP income before income taxes	296,425		277,242		490,454		469,008
Non-GAAP income from operations (1)	$              325,738		$              324,579		$              580,514		$              571,620
GAAP non-operating income (expenses):
Foreign currency gains (losses), net	(1,323)		551		(3,596)		148
Interest income	1,126		548		1,542		719
Interest expense	(29,161)		(43,063)		(59,724)		(85,700)
Other income, net	45		717		65		424
Non-GAAP income before income taxes	$              296,425		$              283,332		$              518,801		$              487,211
GAAP income tax expense	$                67,518		$                64,830		$              109,093		$              107,053
Tax effect of non-GAAP operating adjustments	—		1,544		7,141		4,614
Impact of intra-entity IP transfers (2)	(14,729)		(7,695)		(25,167)		(12,516)
Non-GAAP income tax expense	$                52,789		$                58,679		$                91,067		$                99,151
GAAP effective income tax rate	22.8 %		23.4 %		22.2 %		22.8 %
Non-GAAP effective income tax rate	17.8 %		20.7 %		17.6 %		20.4 %

(1)	See 'Non-GAAP income from operations and operating margin reconciliation' above for more details.
(2)	In the fourth quarter of 2023, and previously in 2021 and 2020, we made changes to our international legal structure, including an intra-entity transfer of certain intellectual property rights, primarily to align with current and future international operations. The transfers resulted in a step-up in the tax basis of intellectual property rights and correlated increases in foreign deferred tax assets based on the fair value of the transferred intellectual property rights. This adjustment represents the current period impact of these transfers.

 

Non-GAAP net income per share reconciliation:
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(in thousands, except per share data)
Numerator:
GAAP net income	$                   228,907		$                   212,412		$                   381,361		$                   361,955
Non-GAAP gross profit adjustments (1)	—		1,586		3,242		4,867
Non-GAAP selling, general and administrative expenses adjustments (2)	—		4,504		25,105		13,336
Tax effect of non-GAAP adjustments	14,729		6,151		18,026		7,902
Non-GAAP net income	$                   243,636		$                   224,653		$                   427,734		$                   388,060
Denominator:
GAAP weighted average common shares outstanding - basic	60,320		62,037		60,442		61,937
Plus: GAAP dilutive effect of stock options and unvested restricted stock units	446		566		468		679
GAAP weighted average common shares outstanding - diluted	60,766		62,603		60,910		62,616
GAAP net income per common share:
Basic	$                          3.79		$                          3.42		$                          6.31		$                          5.84
Diluted	$                          3.77		$                          3.39		$                          6.26		$                          5.78
Non-GAAP net income per common share:
Basic	$                          4.04		$                          3.62		$                          7.08		$                          6.27
Diluted	$                          4.01		$                          3.59		$                          7.02		$                          6.20

(1)	See 'Non-GAAP gross profit and gross margin reconciliation' above for more information.
(2)	See 'Non-GAAP selling, general and administrative expenses and selling, general and administrative expenses as a percent of revenues reconciliation' above for more information.

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCE
Full Year 2024:
	Approximately:
Non-GAAP operating margin and operating income reconciliation:
GAAP operating margin	Over 24%
Non-GAAP adjustments, primarily related to IT system impairments (1)	1 %
Non-GAAP operating margin	Over 25%
Non-GAAP effective tax rate reconciliation:
GAAP effective tax rate	21.5 %
Non-GAAP adjustments, primarily related to amortization of intellectual property (1)(2)	(3.5) %
Non-GAAP effective tax rate	18.0 %
Non-GAAP diluted earnings per share reconciliation:
GAAP diluted earnings per share	$11.66 to $12.11
Non-GAAP adjustments, primarily related to IT system impairments and amortization of intellectual property (1)(2)	$0.79
Non-GAAP diluted earnings per share	$12.45 to $12.90

(1)	For the full year 2024, we expect to incur approximately $28 million in costs primarily for an impairment of information technology systems related to the HEYDUDE integration and costs to transition to our new HEYDUDE distribution center in Las Vegas, Nevada.
(2)	In the fourth quarter of 2023, and previously in 2021 and 2020, we made changes to our international legal structure, including an intra-entity transfer of certain intellectual property rights, primarily to align with current and future international operations. The transfers resulted in a step-up in the tax basis of intellectual property rights and correlated increases in foreign deferred tax assets based on the fair value of the transferred intellectual property rights. This adjustment represents the current period impact of these transfers.

Non-GAAP Financial Guidance

Our forward-looking guidance for consolidated "adjusted operating margin," and "adjusted diluted earnings per share" represents non-GAAP financial measures that exclude or otherwise have been adjusted for special items from our U.S. GAAP financial statements. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment.

While we are able to estimate full year non-GAAP adjustments, we are unable to reconcile forward-looking adjusted measures to their nearest U.S. GAAP measure quarter-by-quarter because we are unable to predict the timing of these adjustments with a reasonable degree of certainty. By their very nature, special and other non-core items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results. Therefore, we are unable to provide a reconciliation of these measures for the guidance related to the third quarter of 2024.

CROCS, INC. AND SUBSIDIARIES REVENUES BY SEGMENT, CHANNEL, and GEOGRAPHY (UNAUDITED)
	Three Months Ended June 30,				Six Months Ended June 30,				% Change				Constant Currency % Change (1)
									Favorable (Unfavorable)
	2024		2023		2024		2023		Q2 2024-2023		YTD 2024-2023		Q2 2024-2023		YTD 2024-2023
	($ in thousands)
Crocs Brand:
North America:
Wholesale	$  173,987		$  181,085		$  354,325		$  353,140		(3.9) %		0.3 %		(3.8) %		0.3 %
Direct-to-consumer	314,728		293,473		517,304		472,727		7.2 %		9.4 %		7.4 %		9.5 %
Total North America (2)	488,715		474,558		871,629		825,867		3.0 %		5.5 %		3.2 %		5.6 %
International:
Wholesale	261,294		226,257		542,959		464,765		15.5 %		16.8 %		18.5 %		19.4 %
Direct-to-consumer	163,980		132,135		243,218		191,096		24.1 %		27.3 %		27.9 %		30.8 %
Total International	425,274		358,392		786,177		655,861		18.7 %		19.9 %		22.0 %		22.8 %
Total Crocs Brand	$  913,989		$  832,950		$  1,657,806		$  1,481,728		9.7 %		11.9 %		11.2 %		13.2 %
Crocs Brand:
Wholesale	$  435,281		$  407,342		$  897,284		$  817,905		6.9 %		9.7 %		8.6 %		11.2 %
Direct-to-consumer	478,708		425,608		760,522		663,823		12.5 %		14.6 %		13.8 %		15.7 %
Total Crocs Brand	913,989		832,950		1,657,806		1,481,728		9.7 %		11.9 %		11.2 %		13.2 %
HEYDUDE Brand:
Wholesale	113,829		148,825		248,582		316,688		(23.5) %		(21.5) %		(23.5) %		(21.5) %
Direct-to-consumer	83,684		90,592		143,747		158,117		(7.6) %		(9.1) %		(7.5) %		(9.0) %
Total HEYDUDE Brand (3)	197,513		239,417		392,329		474,805		(17.5) %		(17.4) %		(17.4) %		(17.4) %
Total consolidated revenues	$  1,111,502		$  1,072,367		$  2,050,135		$  1,956,533		3.6 %		4.8 %		4.8 %		5.8 %

(1)	Reflects year over year change as if the current period results were in constant currency, which is a non-GAAP financial measure. See 'Reconciliation of GAAP Measures to Non-GAAP Measures' above for more information.
(2)	North America includes the United States and Canada.
(3)	The vast majority of HEYDUDE Brand revenues are derived from North America.

 

CROCS, INC. AND SUBSIDIARIES DIRECT-TO-CONSUMER COMPARABLE SALES (UNAUDITED)
Direct-to-consumer ("DTC") comparable sales were as follows:
	Constant Currency (1)
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Direct-to-consumer comparable sales: (2)
Crocs Brand	11.7 %		19.5 %		13.2 %		20.5 %
HEYDUDE Brand	(17.5) %		20.2 %		(17.7) %		24.7 %

(1)	Reflects period over period change on a constant currency basis, which is a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" for more information.
(2)	Comparable store status, as included in the DTC comparable sales figures above, is determined on a monthly basis. Comparable store sales include the revenues of stores that have been in operation for more than twelve months. 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 and in the same month in the following year. Location closures in excess of three months are excluded until the thirteenth month post re-opening. E-commerce comparable revenues are based on same site sales period over period. E-commerce sites that are temporarily offline or unable to transact or fulfill orders ("site disruption") are excluded from the comparable sales calculation during the month of site disruption and in the same month in the following year. E-commerce site disruptions in excess of three months are excluded until the thirteenth month after the site has re-opened. Additionally, comparable sales do not include leap days in leap years.

  

	Investor Contact:	Erinn Murphy, Crocs, Inc.
		(303) 848-7005
		emurphy@crocs.com
	PR Contact:	Melissa Layton, Crocs, Inc.
		(303) 848-7885
		mlayton@crocs.com

 

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SOURCE Crocs, Inc.

FAQ

What were Crocs' Q2 2024 revenue and EPS results?

Crocs reported Q2 2024 revenues of $1,112 million, up 3.6% year-over-year. Diluted EPS increased 11.2% to $3.77, while adjusted diluted EPS rose 11.7% to $4.01.

How did the Crocs Brand perform in Q2 2024?

The Crocs Brand performed strongly in Q2 2024, with revenues increasing 9.7% to $914 million. International revenues for the Crocs Brand grew 18.7%.

What is Crocs' revenue guidance for full-year 2024?

Crocs expects revenue growth of 3% to 5% for full-year 2024 compared to 2023, with the Crocs Brand growing 7% to 9% and the HEYDUDE Brand declining 10% to 8%.

What is Crocs' adjusted EPS guidance for 2024?

Crocs raised its full-year 2024 adjusted diluted EPS guidance to $12.45 to $12.90, up from the previous guidance of $12.25 to $12.73.

How did the HEYDUDE Brand perform in Q2 2024 for Crocs?

The HEYDUDE Brand faced challenges in Q2 2024, with revenues decreasing 17.5% to $198 million. Wholesale revenues for HEYDUDE declined 23.5%.