Slide 1: Q3 2022 Investor Presentation
Q3 2022 Investor Presentation November 2022
Slide 2: Forward-Looking Statement
FORWARD-LOOKING STATEMENT This document includes estimates, projections, and statements relating to our plans, commitments, objectives, and expectations that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act
Slide 3: Contents
CONTENTS ◦ BUSINESS & FINANCIAL HIGHLIGHTS ◦ BRAND PERFORMANCE ◦ FINANCIAL OUTLOOK ◦ APPENDIX 3
Slide 4: Everyone Comfortable In Their Own Shoes
OUR VISION Everyone Comfortable In Their Own Shoes 4
Slide 5: Our Values: The Path We Choose To Walk
OUR VALUES THE PATH WE CHOOSE TO WALK INHERENT DELIGHTFULLY PEOPLE-PURPOSED SIMPLICITY DEMOCRATIC DESIGN We know smart doesn’t have to We celebrate one-of-a-kinds We think people-first at every mean complicated. So we keep and stand together with all step. We design for everything things simple, lig
Slide 6: Crocs Is a Proven Growth Company
OUR STORY CROCS IS A PROVEN GROWTH COMPANY Entrepreneurial Phase Overextension Transformation & Brand Re-ignition Profitable Growth 2002 - 2006 2008 to 2013 2014 to 2017 2018 to Present • Classic clog is born • Over diversified product • Announced intention to refine strategy and earnings • 2018 beg
Slide 7: Business & Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS 7
Slide 8: Business & Financial Highlights: CEO Quote
BUSINESS & FINANCIAL HIGHLIGHTS " Our exceptional third quarter results, including record revenue and industry-leading adjusted operating margin of 28%, are a testament to the strength of the Crocs and HEYDUDE brands. We are raising 2022 guidance following our strong back-to-school performance and 2
Slide 9: Q3 2022 Revenue Growth Summary
BUSINESS & FINANCIAL HIGHLIGHTS Q3 2022 REVENUE GROWTH SUMMARY $985M $716M $269M HEYDUDE Brand Crocs, Inc. Crocs Brand +57% / 63% CC(1) +14% / 20% CC(1) +87% +22% +18% 37% Crocs Brand Digital Crocs Brand DTC Digital Penetration(2) Sales CC Growth(1) Comp Growth(3) 1. Revenue growth on a constant cur
Slide 10: Q3 Revenue Breakdown
BUSINESS & FINANCIAL HIGHLIGHTS Q3 REVENUE BREAKDOWN Product Brand Penetration Digital Geography(1) Channel Penetration(2) 1. Geography is for Crocs Brand only. 2. Digital sales include Crocs.com, heydude.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando). 10
Slide 11: Q3 2022 Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS Q3 2022 FINANCIAL HIGHLIGHTS B/(W) Q3 vs. PY Revenues ($M) $985 +63%(1) Gross Margin 54.9% (890) bp Adjusted Gross Margin(2) 55.1% (910) bp Adjusted SG&A as % of 27.2% 420 bp Revenue(2) Operating Margin 26.8% (560) bp Adjusted Operating Margin(2) 27.9% (490) bp Dilute
Slide 12: Brand Performance
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Slide 13: Crocs Brand Q3 Highlights
BRAND PERFORMANCE CROCS BRAND Q3 HIGHLIGHTS • Revenues +20% CC vs. PY ◦ North America DTC comparable sales +13% ◦ EMEALA +46% CC vs. PY ◦ Asia Pacific +82% CC vs. PY • Christian Cowan collaboration with clogs featured in NY fashion week • Crocs rose to #5 preferred footwear brand for teens, up from
Slide 14: Crocs Brand Q3 Revenue Growth
BRAND PERFORMANCE CROCS BRAND Q3 REVENUE GROWTH Geography +2% +66% / 82% CC(1) +26% / 46% CC(1) North America Asia Pacific EMEALA +22% +18% +22% Channel Digital Sales DTC Wholesale CC Growth(1) CC Growth(1,2) Comparable Growth(3) 1. Revenue growth on a constant currency basis, which is a Non-GAAP Fi
Slide 15: Crocs Brand Q3 Revenue Breakdown
BRAND PERFORMANCE CROCS BRAND Q3 REVENUE BREAKDOWN Digital Geography Channel Penetration(1) 1. Digital sales include Crocs.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando) 15
Slide 16: Building Crocs Brand to $5B+ by 2026E
BRAND PERFORMANCE BUILDING CROCS BRAND TO $5B+ BY 2026E PLANNED GROWTH INITIATIVES • Invest in digital to be 50%+ of long-term Crocs Brand revenues or $2.5B+ • Grow Sandals revenues by 4x to $1.2B+(1) • Double Jibbitz revenues(1) • Increase Asia Pacific region to become ~25% of long-term Crocs Brand
Slide 17: HEYDUDE Brand Q3 Highlights
BRAND PERFORMANCE HEYDUDE BRAND Q3 HIGHLIGHTS • Q3 Revenues of $269M exceeded previous guidance ◦ Revenue growth of +87% vs PY • Brand marketing launch drove higher traffic and contributed to DTC revenues of $88M • HEYDUDE rose to #7 preferred footwear brand for teens, up from #8, in Piper Sandler's
Slide 18: Maximizing HEYDUDE Growth
BRAND PERFORMANCE MAXIMIZING HEYDUDE GROWTH PLANNED GROWTH INITIATIVES • Invest in industry-leading marketing to build brand awareness • Enhance digital capabilities to further accelerate digital • Leverage Crocs strong wholesale relationships to enhance distribution • Leverage Crocs distribution fo
Slide 19: Financial Outlook
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Slide 20: 2022E Guidance
FINANCIAL OUTLOOK 2022E GUIDANCE (numbers on reported basis, unless otherwise noted) FY 2022E Total Revenues $3.455 to $3.520B (1) $2.605 to $2.630B +17% CC(1) $850 to $890M(2) Adjusted Operating Margin(3) ~27%(4,5) Adjusted Operating Income(3) ~$920 to $950M(4,5) Adjusted One Time Costs(3) ~$130M(5
Slide 21: Long Term Projections
FINANCIAL OUTLOOK LONG TERM PROJECTIONS* • Initial expectation of achieving Revenues We expect by 2026: of $1B by 2024 • Revenues: $5B+ • Now expect Revenues to be over $1B in • Adjusted Operating Margin: 26%+ 2023 • Non-GAAP Tax Rate: ~25% • Adjusted Operating Margin: 26%+ • Capital Expenditures: ~
Slide 22: Capital Allocation Priorities
FINANCIAL OUTLOOK CAPITAL ALLOCATION PRIORITIES Deleverage to Business Shareholder <2.0x Gross Investment Returns Leverage Invest to support long-term, Committed to working towards Share repurchases on hold profitable growth deleveraging quickly until gross leverage is <2.0x, which we expect to occu
Slide 23: Deleveraging Remains on Track
FINANCIAL OUTLOOK DELEVERAGING REMAINS ON TRACK Gross Debt / Adjusted EBITDA Outlook(1) ◦ Committed to quickly deleveraging and 3.1x targeting to be below 2.0x gross leverage by 2.5x mid-year 2023 ≤ 2.0x ◦ Share repurchases on hold until gross leverage is <2.0x, which we expect to occur by mid-2023
Slide 24: Appendix
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Slide 25: Non-GAAP Reconciliation
APPENDIX NON-GAAP RECONCILIATION 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 cost of sales,” “Non- GAAP gross profit,” “Non-GAAP gross margin,” “Non-GAAP gross margin by brand,” “N
Slide 26: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 985,094 $ 625,919 $ 2,609,823 $ 1,726,790 GAAP cost of sales $ 443,792
Slide 27: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP selling, general and administrative expenses and selling, general and administrative expenses as a percent of revenues reconciliation: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) GAAP revenues
Slide 28: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income from Operations and Operating Margin Reconciliation: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 985,094 $ 625,919 $ 2,609,823 $ 1,726,790 GAAP income from operations $ 2
Slide 29: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income Tax Expense (Benefit) and Effective Tax Rate Reconciliation: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands) GAAP income from operations $ 264,063 $ 203,068 $ 630,704 $ 523,076 GAAP income b
Slide 30: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Earnings Per Share Reconciliation: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (in thousands, except per share data) Numerator: GAAP net income $ 169,349 $ 153,489 $ 402,424 $ 570,841 Non-GAAP cost of sales a
Slide 31: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Reconciliation of GAAP to Non-GAAP Financial Guidance: Full Year 2022: Approximately: ($ in millions, except per share data) Non-GAAP operating margin and operating income reconciliation: GAAP operating margin and operating income 23% $790 to $820 Non-GAAP a
Slide 32: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Gross Margin Reconciliation by Brand: Three Months Ended September 30, 2022 2021 GAAP Crocs Brand gross margin 57.3 % 63.9 % Non-GAAP adjustments: Distribution centers (1) 0.3 % 0.3 % Inventory reserve in Russia (2) (0.1)% —% Non-GAAP Crocs Brand gr
Slide 33: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Selling, General and Administrative Expenses Reconciliation by Brand: Three Months Ended September 30, 2022 2021 GAAP Crocs Brand selling, general and administrative expenses as a percent of revenues 24.4 % 24.2 % Non-GAAP adjustments: Impact of shu
Slide 34: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income from Operations and Operating Margin Reconciliation by Brand: Three Months Ended September 30, 2022 2021 GAAP Crocs Brand operating margin 32.9 % 39.7 % Non-GAAP cost of sales adjustments (1) 0.2 % 0.3 % Non-GAAP selling, general and administ