Slide 1: Investor Presentation August 2019
INVESTOR PRESENTATION AUGUST 2019
Slide 2: Forward-Looking Statement
FORWARD-LOOKING STATEMENT Some information provided in this document will be forward-looking, and accordingly, is subject to the Safe Harbor provisions of the federal securities law. These statements include, but are not limited to, statements regarding future revenues, gross margin, selling, genera
Slide 3: Agenda
AGENDA • Positioned for Growth………………………………………………………………4 • Financial Information………………………………………………………………17 • Key Investment Considerations…………………………………………....…….22 • Appendix……………………………………………………………………………24 3
Slide 4: Positioned for Growth
POSITIONED FOR GROWTH crocs
Slide 5: A Powerful Brand Positioned for Global Growth
A POWERFUL BRAND POSITIONED FOR GLOBAL GROWTH Scale Brand: Iconic Product: Democratic Brand: Top 10 For men, non-athletic The Classic Clog women, global footwear brand and kids Globally Recognized: Global Reach: World Class Talent: ~65%* Global Aided Brand Awareness Distributed in Driving product an
Slide 6: Repositioned for Long-Term Success
REPOSITIONED FOR LONG-TERM SUCCESS 1 2 3 Simplify the Business to Improve the Quality of Generate Sustainable, Reduce Costs Revenues Profitable Revenue Growth Heavy Lifting Substantially Revenue Base Substantially Confident in Pathway to Complete More Profitable Growth Confident in Pathway to Growth
Slide 7: Sustainable and Profitable Growth Plan
SUSTAINABLE AND PROFITABLE GROWTH PLAN Product & Channel Region Marketing 1 2 3 • Clogs: Innovate & grow • E-commerce: double digit • Asia: largest long-term clog relevance growth continues growth potential • Sandals: Significant long • Wholesale: greatest • Americas: strong growth term growth poten
Slide 8: Grow Clog Relevance
GROW CLOG RELEVANCE • Market leader in $4B* growing global category • Grew clog revenues by 13% in 2018 to ~55% of footwear sales ‒ 2Q19 sales grew 18% to 57% of footwear sales • Strategic goal: drive Clog Relevance by ‒ Impactful collaborations ‒ Trend right colors and graphics ‒ Relevant licenses
Slide 9: Sandals: Significant Long-Term Growth Opportunity
SANDALS: SIGNIFICANT LONG-TERM GROWTH OPPORTUNITY Essential, e.g. CrocBand Flip: • $23B* fragmented global casual sandal** market with no clear market leader • Grew sandal revenues by 19% in 2018 to ~23% of footwear sales ‒ On top of 26.4% growth in 2017 ‒ 2Q19 sales grew 11% to 27% of footwear sale
Slide 10: Invest in New, Visible Comfort Technology
INVEST IN NEW, VISIBLE COMFORT TECHNOLOGY • Our LiteRide™ collection features foam footbeds, our latest breakthrough in world-class comfort. Engineered to make you feel sensational on every step along life’s winding path. ‒ Next generation LiteRide™ foam insoles are super-soft, incredibly lightweigh
Slide 11: Personalization with Jibbitz Charms
PERSONALIZATION WITH JIBBITZ CHARMS • JibbitzTM Charms: an important part of our brand proposition ‒ Personalization is a global trend that continues to grow in relevance ‒ JibbitzTM provide consumers with a fun and unique way to make each pair of clogs their very own by personalizing the clog “blan
Slide 12: Growth Ignited by Global Social & Digital Marketing
OUR GROWTH WILL BE IGNITED BY POWERFUL GLOBAL SOCIAL & DIGITAL MARKETING BRAND AMBASSADORS • Evolving Come As You Are campaign to incorporate impactful local brand ambassadors and influencer activations • Focusing on driving clog relevance and sandal awareness • Expanding digital reach and engagemen
Slide 13: Double Digit E-Commerce Growth Continues
DOUBLE DIGIT E-COMMERCE GROWTH CONTINUES Primary focus on company owned e-commerce and controlling E-COMMERCE REVENUE brand presence on key marketplaces ($ in • E-commerce: Crocs operated e-commerce sites Millions) 200 ‒ Fast growing distribution channel driven by global consumer adoption and more e
Slide 14: E-tail and Distributors Drive Wholesale
E-TAIL AND DISTRIBUTORS DRIVE WHOLESALE • E-tailers and distributors represent approximately 2018 DISTRIBUTOR FOOTPRINT half of the global wholesale business • Multibrand e-tailers are gaining share globally ‒ Crocs: achieving consistent double-digit e-tail growth ‒ Elevating the brand representatio
Slide 15: Prioritize Outlet Growth Within Retail
PRIORITIZE OUTLET GROWTH WITHIN RETAIL • Retail fleet has been rightsized and majority is STORE COUNT now focused on outlet stores; ended 2Q19 with 370 stores 585 559 558 • Outlet merchandising strategy has been repositioned to majority “Built for Outlet” 447 assortments 383 370 • In Americas, outle
Slide 16: Asia Is Largest Growth Opportunity
ASIA IS LARGEST GROWTH OPPORTUNITY Asia – Most opportunity for growth • Multichannel growth in Japan and South Korea GLOBAL CLOG & SANDAL FOCUS • Increase brand recognition and drive clog relevance in China • Strong e-commerce growth supported by participation on key marketplaces Americas – The larg
Slide 17: Financial Information
FINANCIAL INFORMATION crocs
Slide 18: Recent Financial Results
RECENT FINANCIAL RESULTS FULL YEAR 2018 2Q 2019 A very successful year: A great second quarter: • Robust revenue growth • Revenues: $358.9M, up 9.4% – 6.3% growth despite store closures and business model – On a constant currency basis and excluding $6M impact of store changes reducing revenues by ~
Slide 19: 3Q 2019 Financial Guidance
3Q 2019 FINANCIAL GUIDANCE (ISSUED 8/1/19) • Revenues: $295M (up 13.0%) - $305M (up 16.8%) vs. $261.1M in 3Q18 ‒ Expecting a negative currency impact of ~$2M and store closures to reduce revenues by ~$3M • Adjusted Gross Margin*: ~51.5% compared to 53.3% in 3Q18, with the projected decline due to: ‒
Slide 20: Full Year 2019 Guidance
FULL YEAR 2019 GUIDANCE (ISSUED 8/1/19) • Revenues: Expected to increase 9-11% over $1,088.2M in 2018 ‒ Includes negative currency impact of ~$25M & revenue reduction from store closures of ~$20M • Adjusted Gross Margin* ~50.5% vs. 51.5% in 2018, with the projected decline due to: ‒ ~130 bps of redu
Slide 21: Estimated Impact of Tariffs (as of August 2019)
ESTIMATED IMPACT OF TARIFFS (AS OF AUGUST 2019) Current U.S. Sourcing Mix Expected U.S. Sourcing Mix in 2020 ~30% from <10% from China: China: subject to subject to additional additional 25% tariff 25% tariff > 90% not ~70% not subject to subject to additional additional tariffs tariffs China ROW Ch
Slide 22: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS 22
Slide 23: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS We expect a successful business An unmistakable icon recognized A powerful global brand with a transformation to drive further increases around the world large, democratic consumer base in shareholder value • Growing revenues and gross margin while reducing SG&A; a sust
Slide 24: Appendix
APPENDIX crocs
Slide 25: Non-GAAP Reconciliation
NON-GAAP Non-GAAP cost of sales and gross margin recon GAAP revenues GAAP cost of sales ‘New distribution center” Other Total adjustments ‘Non-GAAP cost of sales GAAP gross margin GAAP gross margin as a percent of revenues ‘Non-GAAP gross margin ‘Non-GAAP gross margin as a percent of reventes RECONC
Slide 26: Non-GAAP Reconciliation
‘Now-GAAP earings per share reconciliation: ‘Three Months Ended June 30, _ Six Months Ended June 3, 201s 2018 2019 ‘Ga thousands, excopt per share data) ‘Nuventor: GAAPact income atuibtable to commen ‘sockuolder 3 BI § 3046 § SOS SHWE ‘Lose: GAAP adjucament fr net icons allocble to ockholders 62 “Se
Slide 27: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCE crocs
Slide 28: Highlights of Blackstone Deal
HIGHLIGHTS OF BLACKSTONE DEAL • Background: In 2014, Blackstone invested $200M in Crocs Preferred Shares ‒ Earned 6%/$12M dividend annually and a net income allocation in any quarter with positive earnings ‒ Convertible at $14.50/sh into ~13.8M shares of Common Stock. Crocs could only force conversi
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