Crocs, Inc. Reports 2010 First Quarter Financial Results

NIWOT, Colo.--(BUSINESS WIRE)--

Crocs, Inc. CROX today reported financial results for the first quarter ended March 31, 2010.

Revenue for the first quarter of 2010 increased 23.7% to $166.9 million compared to revenue of $134.9 million in the year ago period. First quarter 2010 net income was $5.7 million with diluted earnings per share of $0.07, compared to a first quarter 2009 net loss of $22.4 million, or a loss per diluted share of ($0.27).

Year-over-year first quarter changes in the Company’s channel revenue streams were as follows:

• Wholesale sales increased 26.1% to $120.2 million;
• Retail sales increased 23.3% to $34.4 million; and
• Internet sales increased 5.1% to $12.3 million.

Changes in the Company’s regional revenue streams during the same quarterly periods were as follows:

• Europe increased 34.3% to $38.0 million;
• Asia increased 40.3% to $54.7 million; and
• Americas increased 9.8% to $74.2 million.

Balance Sheet

The Company’s cash and cash equivalents as of March 31, 2010 increased to $53.8 million compared to $50.9 million at March 31, 2009. The Company had no bank debt at March 31, 2010.

Inventory decreased to $107.2 million at March 31, 2010 from $131.2 million at March 31, 2009, resulting in inventory turnover of 3.2 times in the current quarter.

The Company ended the first quarter of 2010 with accounts receivable of $97.4 million compared to $60.6 million at March 31, 2009. Days sales outstanding increased from 40.4 days for the three months ended March 31, 2009 to 52.5 days for the three months ended March 31, 2010.

“Our return to first quarter profitability underscores the resiliency of Crocs as a brand and as a company,” commented John McCarvel, President and Chief Executive Officer. “Revenues improved across all channels and across each region this quarter driven by strong customer reception to our products. We also turned a critical corner in our wholesale channel this quarter, where revenues were up in all regions for the first time in more than a year. Margins also improved as we benefitted from our cost-savings initiatives undertaken in 2009. Our strategy to return to profitable growth in 2010 has not changed and this positive start to the year positions us well to execute against that plan.”

Guidance

The Company expects to generate between $210 million and $220 million in revenue during its 2010 second quarter. This represents projected growth of between 20% and 26% over the non-GAAP revenue of $174.0 million reported in the second quarter of 2009, which excludes $23.7 million in previously-impaired sales the Company has stated would be non-recurring.

The Company expects second quarter 2010 diluted earnings per share to be between $0.18 and $0.22. This guidance assumes an effective tax rate of 30%.

Conference Call Information

A conference call to discuss Crocs’ first quarter 2010 financial results is scheduled for today (May 6, 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.

In discussing financial results and guidance on the conference call, the Company may refer to certain non-GAAP measures. Reconciliations of any such non-GAAP measures to the most directly comparable financial measures in accordance with GAAP can be found on the Company’s website at www.crocs.com in the “Company” section under “Investor Relations.”

About Crocs, Inc.

A world leader in innovative casual footwear for men, women and children, Crocs, Inc. 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.

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 effectively manage our future growth or declines in revenue; changing fashion trends; our ability to maintain and expand revenues and gross margin, net of the impact of sales of impaired inventories; 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 maintain sufficient liquidity; 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.

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
			Three Months Ended March 31,
			2010				2009
Revenues			$	166,852			$	134,892
Cost of sales				80,148				85,161
Gross profit				86,704				49,731
Selling, general and administrative expenses				74,778				68,740
Foreign currency translation losses (gains), net				(292	)			3,408
Restructuring charges				2,539				38
Impairment charges				141				69
Charitable contributions expense				143				39
Income (loss) from operations				9,395				(22,563	)
Interest expense				129				696
Gain on charitable contributions				(84	)			-
Other (income) expense				241				(1,052	)
Income (loss) before income taxes				9,109				(22,207	)
Income tax (benefit) expense				3,392				210
Net income (loss)			$	5,717			$	(22,417	)
Net income (loss) per common share:
Basic			$	0.07				($0.27	)
Diluted			$	0.07				($0.27	)
Weighted average common shares outstanding:
Basic				84,485,728				84,392,620
Diluted				87,218,802				84,392,620

CROCS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
		March 31, 2010				December 31, 2009				March 31, 2009
ASSETS
Current assets:
Cash and cash equivalents		$	53,800			$	77,343			$	50,895
Restricted cash			1,148				1,144				-
Accounts receivable, net			97,421				50,458				60,605
Inventories			107,183				93,329				131,161
Deferred tax assets, net			7,352				7,358				10,856
Income tax receivable			11,467				8,611				5,391
Prepaid expenses and other current assets			24,609				29,011				17,130
Total current assets			302,980				267,254				276,038
Property and equipment, net			68,054				71,084				91,027
Restricted cash			1,479				1,506				1,835
Intangible assets, net			38,597				35,984				39,307
Deferred tax assets, net			18,484				18,479				22,355
Other assets			17,672				15,431				16,370
Total assets		$	447,266			$	409,738			$	446,932
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	56,187			$	23,434			$	63,469
Accrued expenses and other current liabilities			47,965				53,589				41,885
Accrued restructuring charges			3,638				2,616				499
Income taxes payable			8,923				6,377				18,520
Note payable, current portion of long-term debt and capital lease obligations			1,366				640				19,947
Total current liabilities			118,079				86,656				144,320
Long-term debt and capital lease obligations			1,611				912				-
Deferred tax liabilities, net			2,058				2,192				4,755
Long-term restructuring			77				520				1,024
Other liabilities			31,601				31,838				31,907
Total liabilities			153,426				122,118				182,006
Commitments and contingencies
Stockholders’ equity:
Common shares, par value $0.001 per share; 250,000,000 shares authorized, 86,297,253 and 85,704,194 shares issued and outstanding, respectively, at March 31, 2010 and 86,224,760 and 85,659,581 shares issued and outstanding, respectively, at December 31, 2009 and 84,393,940 and 83,869,940 shares issued and outstanding, respectively, at March 31, 2009.			86				85				84
Treasury Stock, at cost, 593,059 and 565,179 shares, respectively			(25,344	)			(25,260	)			(25,022	)
Additional paid-in capital			268,757				266,472				235,955
Deferred compensation			-				-				(54	)
Retained earnings			27,872				22,155				41,816
Accumulated other comprehensive income			22,469				24,168				12,147
Total stockholders’ equity			293,840				287,620				264,926
Total liabilities and stockholders’ equity		$	447,266			$	409,738			$	446,932