Ends first quarter 2009 with $51 million in cash and cash equivalents
Reduces inventory 8% since last quarter; 51% since Q1 2008
Crocs, Inc. (NASDAQ: CROX) today reported financial results for the
first quarter ended March 31, 2009.
Q1 2009 revenue of $134.9 million is up 7% from the quarter ended Q4 of
2008 and down $63.6, or 32% from Q1 of 2008. The Company reported a net
loss of $22.4 million in the first quarter of 2009 with a diluted loss
per share of $0.27, compared to a Q4 net loss of $34.7 million, or
($0.42) per share and a Q1 2008 net loss of $4.5, or ($0.05) per share.
Selling, general and administrative costs are down 26% compared to Q4
2008 and down 6.2% from the same quarter a year ago.
Year-over-year changes in the Company’s channel revenue streams were as
follows:
-
Retail sales increased 60% to $27.9 million;
-
Internet sales increased 46% to $11.7 million; and
-
Wholesale sales decreased 45% to $95.3 million.
Changes in the Company’s regional revenue streams during the same
periods were as follows:
-
Asia increased 7% to $39.0 million;
-
Europe decreased 49% to $28.3 million; and
-
Americas decreased 37% to $67.6 million.
The Company reported a net loss of $22.4 million, or ($0.27) per diluted
share for the three months ended March 31, 2009 compared to a net loss
of $4.5 million, or ($0.05) per diluted share for the three months ended
March 31, 2008. Excluding a $3.4 million pre-tax foreign currency
exchange rate loss primarily on intercompany balances, the Company’s
non-GAAP net loss was $19.0 million or ($0.23) per diluted share in the
three months ended March 31, 2009.
Balance Sheet
The Company’s cash and cash equivalents declined to $50.9 million from
$51.7 million as of December 31, 2008. However, compared to the quarter
ended March 31, 2008, the Company’s cash and cash equivalents increased
by approximately $21.3 million. Borrowings under the Company’s credit
facility were $19.8 million at March 31, 2009 compared to $22.4 million
at December 31, 2008 and $42.8 million at March 31, 2008. During the
first quarter of 2009, the Company was successful in extending the term
of its bank credit facility through September 30, 2009. The Company is
currently in discussions regarding a new borrowing arrangement and is
exploring alternatives for other sources of capital for ongoing cash
needs.
Inventory decreased 8% since December 31, 2008 to $131.2 million at
March 31, 2009. Compared to first quarter 2008, inventories decreased
51% as a result of more stringent asset management and inventory
write-downs taken in the last half of 2008.
The Company had accounts receivable of $60.6 million as of March 31,
2009 compared to $35.3 million at December 31, 2008 and $154.6 million
as of March 31, 2008. The year-over-year reduction in accounts
receivable is due to an improvement in accounts receivable collections
as days sales outstanding decreased from 70.9 days for the three months
ended March 31, 2008 to 40.4 days for the three months ended March 31,
2009.
Capital expenditures, net of proceeds, in the first quarter of 2009 were
$4.4 million compared to $22.2 million in the first quarter of 2008.
“While our first quarter results were generally in line with
expectations, there is still much work ahead of us in order to improve
on our recent performance and return to consistent profitability,”
stated John Duerden, President and Chief Executive Officer of Crocs,
Inc. “Crocs achieved a tremendous amount in a few short years and
quickly established itself as a truly global brand with market
penetration in more than 100 countries. During this time, the product
line evolved significantly from a few key items into seasonal footwear
collections that have created a large and loyal consumer base. With this
rapid growth came a number of challenges which, along with the recent
recession, have negatively impacted the business. In response, Crocs
took several steps throughout 2008 to better align its expense structure
with lower sales volumes and strengthen its balance sheet. Our intention
in 2009 is to preserve the strength of the Crocs brand while endeavoring
to strike a balance between lowering our fixed cost base and responsibly
reducing our inventory. I am confident that with the solid foundation
already in place and the talented group of people working here that we
can accomplish our near-term objectives while creating a stronger, more
efficient company for the future.”
Guidance
The Company expects to generate between $135 to $160 million in revenue
during its fiscal second quarter, with a diluted loss per share between
($0.31) and ($0.15). Due to uncertainties created by the current global
economic downturn, the Company is not providing annual guidance at this
time.
Conference Call Information
A conference call to discuss first quarter fiscal 2009 financial results
is scheduled for today (May 7, 2009) 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 the latter
site prior to the call, where you can download the software for free.
About Crocs, Inc.
Crocs, Inc. is a designer, manufacturer and retailer of footwear for
men, women and children under the Crocs™ brand.
All Crocs™ brand shoes feature Crocs’ proprietary closed-cell resin,
Croslite™, which represents a substantial innovation in footwear. The
Croslite™ material enables Crocs to produce soft, comfortable,
lightweight, superior-gripping, non-marking and odor-resistant shoes.
These unique elements make Crocs™ footwear ideal for casual wear, as
well as for professional and recreational uses such as boating, hiking,
hospitality and gardening. The versatile use of the material has enabled
Crocs to successfully market its products to a broad range of consumers.
Crocs™ shoes are sold in 100 countries and come in a wide array of
colors and styles. Please visit www.crocs.com
for additional information.
Forward-looking statements
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 obtain adequate financing; our significant recent expansion;
our ability to manage our future growth effectively; changing fashion
trends; our defense and the ultimate outcome of a pending class action
lawsuit; our ability to accurately anticipate and respond to seasonal or
quarterly fluctuations in our operating results; our management and
information systems infrastructure; our ability to obtain and protect
intellectual property rights; our reliance on third party manufacturing
and logistics providers for the production and distribution of products;
our limited manufacturing capacity and distribution channels; our
reliance on a single source supply for certain raw materials; inherent
risks associated with the manufacture, distribution and sale of our
products overseas; our reliance on market acceptance of the small number
of products we sell; our ability to develop and sell new products; our
limited operating history; our ability to accurately forecast consumer
demand for our products; our ability to maintain effective internal
controls; our ability to attract, assimilate and retain management
talent; retail environment; our ability to effectively market and
maintain a positive brand image; the effect of competition in our
industry; the effect of potential adverse currency exchange rate
fluctuations; and other factors described in our 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.
|
CROCS, INC. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands, except share and per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
134,892
|
|
|
$
|
198,540
|
|
|
Cost of sales
|
|
|
85,161
|
|
|
|
113,305
|
|
|
Gross profit
|
|
|
49,731
|
|
|
|
85,235
|
|
|
Selling, general and administrative expenses
|
|
|
72,187
|
|
|
|
76,977
|
|
|
Restructuring charges
|
|
|
38
|
|
|
|
3,849
|
|
|
Impairment charges
|
|
|
69
|
|
|
|
10,813
|
|
|
Income (loss) from operations
|
|
|
(22,563
|
)
|
|
|
(6,404
|
)
|
|
Interest expense
|
|
|
696
|
|
|
|
374
|
|
|
Other income
|
|
|
(1,052
|
)
|
|
|
(362
|
)
|
|
Income (loss) before income taxes
|
|
|
(22,207
|
)
|
|
|
(6,416
|
)
|
|
Income tax expense (benefit)
|
|
|
210
|
|
|
|
(1,889
|
)
|
|
Net income (loss)
|
|
$
|
(22,417
|
)
|
|
$
|
(4,527
|
)
|
|
Net Income (loss) per common share:
|
|
|
|
|
|
Basic
|
|
|
($0.27
|
)
|
|
|
($0.05
|
)
|
|
Diluted
|
|
|
($0.27
|
)
|
|
|
($0.05
|
)
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
84,392,620
|
|
|
|
82,488,601
|
|
|
Diluted
|
|
|
84,392,620
|
|
|
|
82,488,601
|
|
|
CROCS, INC. AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(In thousands, except share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
March 31, 2009
|
|
December 31, 2008
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
50,895
|
|
|
$
|
51,665
|
|
|
Accounts receivable, net
|
|
60,605
|
|
|
|
35,305
|
|
|
Inventories
|
|
131,161
|
|
|
|
143,205
|
|
|
Deferred tax assets, net
|
|
10,856
|
|
|
|
11,364
|
|
|
Income tax receivable
|
|
5,391
|
|
|
|
24,417
|
|
|
Prepaid expenses and other current assets
|
|
17,130
|
|
|
|
13,415
|
|
|
Total current assets
|
|
276,038
|
|
|
|
279,371
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
91,027
|
|
|
|
95,892
|
|
|
Restricted cash
|
|
1,835
|
|
|
|
2,922
|
|
|
Intangible assets, net
|
|
39,307
|
|
|
|
40,892
|
|
|
Deferred tax assets, net
|
|
22,355
|
|
|
|
21,231
|
|
|
Other assets
|
|
16,370
|
|
|
|
15,691
|
|
|
Total assets
|
$
|
446,932
|
|
|
$
|
455,999
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
$
|
63,469
|
|
|
$
|
35,137
|
|
|
Accrued expenses and other current liabilities
|
|
41,793
|
|
|
|
50,076
|
|
|
Accrued restructuring charges
|
|
499
|
|
|
|
1,439
|
|
|
Deferred tax liabilities, net
|
|
92
|
|
|
|
30
|
|
|
Income taxes payable
|
|
18,520
|
|
|
|
24,420
|
|
|
Note payable, current portion of long-term debt and capital lease
obligations
|
|
19,947
|
|
|
|
22,431
|
|
|
Total current liabilities
|
|
144,320
|
|
|
|
133,533
|
|
|
|
|
|
|
|
Deferred tax liabilities, net
|
|
4,755
|
|
|
|
2,917
|
|
|
Long term restructuring
|
|
1,024
|
|
|
|
959
|
|
|
Other liabilities
|
|
31,907
|
|
|
|
31,427
|
|
|
Total liabilities
|
|
182,006
|
|
|
|
168,836
|
|
|
|
|
|
|
|
Commitments and contingencies (note 12)
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
Common shares, par value $0.001 per share; 250,000,000 shares
authorized, 84,393,940 and 83,869,940 shares issued and outstanding
at March 31, 2009 and 83,543,501 and 83,019,501 shares issued and
outstanding at March 31, 2008
|
|
84
|
|
|
|
84
|
|
|
Treasury Stock, 524,000 shares, at cost
|
|
(25,022
|
)
|
|
|
(25,022
|
)
|
|
Additional paid-in capital
|
|
235,955
|
|
|
|
232,037
|
|
|
Deferred compensation
|
|
(54
|
)
|
|
|
(246
|
)
|
|
Retained earnings
|
|
41,816
|
|
|
|
64,233
|
|
|
Accumulated other comprehensive income
|
|
12,147
|
|
|
|
16,077
|
|
|
Total stockholders’ equity
|
|
264,926
|
|
|
|
287,163
|
|
|
Total liabilities and stockholders’ equity
|
$
|
446,932
|
|
|
$
|
455,999
|
|
|
Crocs, Inc.
|
|
Reconciliation of GAAP Measures to Non-GAAP Measures
|
|
(In thousands, except share and per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company prepares and reports its financial statements in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”). Internally, management monitors the operating
performance of its business using non-GAAP metrics similar to
those below. These non-GAAP measures exclude the effects of
foreign exchange rate loss, restructuring activities, inventory
write-down, and asset impairment charges. In management’s opinion,
these non-GAAP measures are important indicators of the continuing
operations of our business and provide better comparability
between reporting periods because they exclude items that may not
be indicative of current period results and provide a better
baseline for analyzing trends in our operations. The Company does
not, nor does it suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. The
Company believes the disclosure of the effects of these items
increases the reader’s understanding of the underlying performance
of the business and that such non-GAAP financial measures provide
investors with an additional tool to evaluate our financial
results and assess our prospects for future performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
3 months ended
|
|
|
3 months ended
|
|
|
3 months ended
|
|
|
|
|
March 31, 2009
|
|
|
March 31, 2008
|
|
|
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP selling, general and administrative expense
|
72,187
|
|
|
|
76,977
|
|
|
|
97,576
|
|
|
|
Foreign currency (gain)/loss
|
3,408
|
|
(1)
|
|
(9,159
|
)
|
(1)
|
|
21,091
|
(1)
|
|
Non-GAAP selling, general and administrative expense
|
68,779
|
|
|
|
86,136
|
|
|
|
76,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss
|
(22,417
|
)
|
|
|
|
|
|
|
|
|
|
Foreign currency (gain)/loss, net of tax
|
3,376
|
|
(1)
|
|
|
|
|
|
|
|
Non-GAAP net loss
|
(19,041
|
)
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per diluted share
|
$ (0.23
|
)
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The proforma adjustments in the GAAP to Non-GAAP reconciliation
above represent the add-back of GAAP charges taken in connection
with our quarter foreign currency exchange rate loss, net of tax
calculated based on our quarterly effective tax rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) As the Company reported a GAAP net loss for the quarter ended
March 31, 2008, the dilutive effect of stock options and awards were
not included in the computation of diluted earnings per share
because their inclusion would have been anti-dilutive.
|
Company:
Russell Hammer, 303-848-7000
Chief Financial Officer
OR
Tia
Mattson, 303-848-7000
Media Relations
OR
Investors:
ICR,
Inc.
Chad Jacobs/Brendon Frey, 203-682-8200
