Crocs Inc. Reports 2012 Third Quarter Financial Results
Crocs Inc. (NASDAQ: CROX) reported today financial results for the third quarter ended September 30, 2012. Revenue for the third quarter of 2012 increased 7.5% to $295.6 million compared with revenue of $274.9 million reported in the third quarter of 2011. Net income for the third quarter of 2012 was $45.1 million, or $0.49 per diluted share, compared with net income of $30.2 million, or $0.33 per diluted share, in the third quarter of 2011.
From a channel perspective, wholesale sales increased 1.5% to $156.2 million compared with sales of $154.0 million in the third quarter of 2011. Internet sales increased 6.0% to $27.1 million compared with sales of $25.6 million in the third quarter of 2011. Retail sales increased 17.7% to $112.2 million compared with sales of $95.3 million in the third quarter of 2011. The company ended the quarter with 499 retail store locations compared with 410 locations a year ago. Global same store sales for the third quarter of 2012 increased 1.0% on a currency neutral basis, as the Americas increased 5.5%, Europe increased 0.9%, and Asia declined 6.3%.
Sales growth during the quarter was driven by strength in the Americas and Asia. Geographically, revenue increased 7.4% for the Americas, 11.3% for Asia and decreased 2.9% for Europe. On a constant currency basis, revenue increased 8.6% for the Americas, 13.0% for Asia, 7.3% for Europe, and 10.3% globally.
“Our revenue growth during the third quarter reflects the benefit of balanced distribution channels globally. Our direct to consumer channel in the Americas increased 12% on year-over-year basis, highlighted by a mid single digit same store sales gain, and our expanded presence in Asia resulted in a direct to consumer sales increase of 17% in that region,” said John McCarvel, President and Chief Executive Officer. “Our Americas and Asia performance helped to more than offset weakness in the European market, where challenging macroeconomic conditions and foreign currency exchange rate fluctuations continue to pressure our results. At the same time, we haven't been fully immune to some of the recent choppiness in Asia, particularly in Japan, where consumer demand slowed as the third quarter progressed. Despite the economic headwinds we faced during quarter, we continued to grow the business and make strategic progress toward our long-term goal of evolving Crocs into a four-season brand. For the spring summer 2013 season our wholesale pre-books have been strong. We are excited about the prospects for 2013 as enthusiasm for our products continues to grow and our opportunities globally expand.”
Gross profit for the third quarter of 2012 increased 9.2% to $160.7 million, or 54.4% as a percentage of sales, from $147.2 million, or 53.5% as a percentage of sales in the same period last year. Selling, General, & Administrative expenses (SG&A) increased 8.1% to $120.7 million versus $111.7 million a year ago. As a percentage of sales, SG&A was 40.8% compared with 40.6% in the third quarter of 2011.
Cash and cash equivalents at September 30, 2012 increased 41.8% to $312.6 million compared to $220.4 million at September 30, 2011. Inventories at September 30, 2012 were $187.5 million, up 24.1% compared to inventories at September 30, 2011 of $151.1 million. Inventory levels during the third quarter of 2012 were partially driven by the 22% increase in retail store locations in the quarter and the need for additional inventory for the 35 to 40 new store openings planned for the fourth quarter of 2012.
Backlog at September 30, 2012 increased 33.2% to $395.4 million compared with backlog of $296.8 million at September 30, 2011. John McCarvel continued “We saw exceptional growth in third quarter of 2012 pre-books as our wholesale customers accelerated their order books to secure sourcing for spring summer deliveries of our hottest new products for 2013, which include the huarache, molded boat shoes, and our women's wedge line.”
For the quarter, the company recorded a non-recurring tax benefit of $11.4 million due to a reversal of certain tax provisions and the release of certain valuation allowances associated with deferred tax assets.
For the fourth quarter of 2012, the Company expects break-even diluted earnings per share on revenue of $220 million.
Conference Call Information
A conference call to discuss Crocs' 2012 third quarter financial results is scheduled for today (October 24, 2012) 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.
Celebrating its 10th anniversary in 2012, 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 200 million pairs of shoes in more than 90 countries around the world. The brand celebrated reaching $1 billion in annual sales in 2011.
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 future revenue and earnings, backlog, future orders, prospects and product pipeline. 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. 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 INCOME|
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|($ thousands, except per share data)||2012||2011||2012||2011|
|Cost of sales||134,826||127,722||396,682||360,591|
|Selling, general and administrative expenses||120,729||111,672||349,737||309,769|
|Income from operations||40,014||35,008||151,071||126,302|
|Foreign currency transaction (gains) losses, net||21||(2,358||)||2,670||(4,560||)|
|Other (income) expense, net||(80||)||335||(1,747||)||636|
|Income before income taxes||39,696||36,827||149,592||129,594|
|Income tax expense (benefit)||(5,384||)||6,620||14,642||22,377|
|Net income per common share:|
|CROCS, INC. AND SUBSIDIARIES|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|September 30,||December 31,||September 30,|
|Cash and cash equivalents||$||312,580||$||257,587||$||220,388|
|Accounts receivable, net of allowances of $17,557 and $15,508, respectively||121,396||84,760||95,305|
|Deferred tax assets, net||8,042||7,047||14,134|
|Income tax receivable||5,829||5,828||16,460|
|Prepaid expenses and other current assets||26,813||20,199||18,654|
|Total current assets||688,292||525,343||534,538|
|Property and equipment, net||76,577||67,684||66,115|
|Intangible assets, net||61,049||48,641||47,372|
|Deferred tax assets, net||32,882||30,375||31,423|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accrued expenses and other current liabilities||94,389||76,506||75,563|
|Deferred tax liabilities, net||3,497||2,889||15,237|
|Income taxes payable||25,260||8,273||22,373|
|Bank borrowings and current portion of capital lease obligations||28||1,118||1,232|
|Total current liabilities||201,277||155,303||171,759|
|Long term income tax payable||30,449||41,665||35,427|
|Long term deferred tax liabilities, net||-||-||1,070|
|Commitments and contingencies|
|Preferred shares, par value $0.001 per share, 5,000,000 shares authorized, none outstanding||-||-||-|
|Common shares, par value $0.001 per share, 250,000,000 shares authorized,|
|90,972,999 and 90,465,878 shares issued and outstanding, respectively, at|
|Sept 30, 2012 and 90,306,432 and 89,807,146 shares issued and outstanding,|
|respectively, at December 31, 2011||91||90||90|
|Treasury stock, at cost, 522,186 and 499,286 shares, respectively||(19,211||)||(19,759||)||(20,103||)|
|Additional paid-in capital||305,204||293,959||291,609|
|Accumulated other comprehensive income||17,280||14,821||21,555|
|Total stockholders' equity||640,984||491,780||490,249|
|Total liabilities and stockholders' equity||$||891,604||$||695,453||$||704,254|
|Three Months Ended||Currency||Nine Months Ended||Currency|
|September 30,||% Change||% Change (1)||September 30,||% Change||% Change (1)|
|Three Months Ended||Constant||Nine Months Ended||Constant|
|September 30,||Currency||September 30,||Currency|
|($ thousands)||2012||2011||% Change||% Change (1)||2012||2011||% Change||% Change (1)|
|(1) Current period results have been restated using 2011 average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.|
|Company-operated retail locations:||
September 30, 2011
|December 31, 2011||Opened||
|September 30, 2012|
|Total company-operated retail locations||410||430||138||(69)||499|
|Store in Store||92||101||30||(32)||99|
|Total company-operated retail locations||410||430||138||(69)||499|
|Constant Currency||Constant Currency|
|Three Months Ended||
Nine Months Ended
|Comparable store sales growth (1)||September 30, 2012 (2)||
September 30, 2012 (2)
(1) Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteen 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 they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure. Locations closures in excess of three months are excluded until the thirteen month post re-opening.
(2) Current period results have been restated using 2011 average foreign exchange rates for the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.