Crocs, Inc. · NASDAQ:CROX
Crocs — Baird's 2023 Global Consumer, Technology & Services Conference
44 slides from Crocs's conference presentation, Jun 7, 2023
Slide 1: Investor Presentation
Investor Presentation June 2023
Slide 2: Forward Looking Statement
Forward Looking Statement This document includes estimates, projections, and statements relating to our business plans, commitments, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27
Slide 3: Contents
Contents • Business Highlights • Update on Select Crocs Brand Growth Drivers • HEYDUDE Update • Q1 Financial Highlights • Financial Outlook • Appendix 3 3
Slide 4: Our Vision: Everyone Comfortable In Their Own Shoes
Our Vision Everyone Comfortable In Their Own Shoes Our Vision 4
Slide 5: Our Values
Delightfully Inherent People-Purposed Democratic Simplicity Design We celebrate one-of-a-kinds and We know smart doesn’t have to stand together with all different We think people-first at every mean complicated. So we keep kinds. step. We design for everything things simple, light, and totally you d
Slide 6: Business Highlights
Business Highlights 6
Slide 7: Crocs is a Proven Growth Company
Business Highlights Crocs is a Proven Growth Company Entrepreneurial Phase Overextension Transformation & Brand Re-ignition Profitable Growth 2002 to 2006 2008 to 2013 2014 to 2017 2018 to Present • Classic clog is born in • Over diversification of • Announced intention to refine strategy and earnin
Slide 8: Market-Leading Total Shareholder Return
Business Highlights Market-Leading Total Shareholder Return Value of $100 Invested December 31, 2017 Crocs, Inc. 5-year annualized TSR would have made it the #2 best performing stock had it been in the S&P 500 8
Slide 9: Our exceptional first quarter results are a testament to the strength of our brands
Business Highlights " Our exceptional first quarter results are a testament to the strength of our brands. The Crocs Brand grew 19.0% as we see a strong consumer response to our new clog and sandal introductions. The HEYDUDE brand is gaining momentum and experienced outstanding DTC growth. We are ra
Slide 10: Q1 2023 Highlights
Business Highlights Q1 2023 Highlights • Revenues of $884 million, +36% CC(1), grew in all brands, regions and channels ◦ Crocs Brand revenues +22% CC(1) and DTC comparable sales growth +19% ◦ Crocs Brand North America revenues +10% with 12% DTC comparable sales growth and 6% Wholesale CC growth ◦ C
Slide 11: Crocs, Inc. Investment Highlights
Business Highlights Business Highlights • A Global Leader in Casual Footwear with $160B Total Addressable Market • Two Iconic, High-Growth Scale Brands Aligned to Long-Term Consumer Trends Crocs, Inc. • Diversified Sources of Growth Across Brands, Investment Categories, Geographies and Channels High
Slide 12: Update on Select Crocs Brand Growth Drivers
Update on Select Crocs Brand Growth Drivers 12
Slide 13: TTM Q1 2023 Revenue Breakdown
Update on Select Crocs Brand Growth Drivers Diversified Sources of Growth Product Brand Penetration TTM Q1 2023 Revenue Breakdown Digital Geography(1) Channel Penetration(2) Note: Data is for trailing twelve months ended March 31, 2023. 1. Geography is for Crocs Brand only. 2. Digital sales include
Slide 14: Importance of Sandals to the Crocs Brand
Update on Select Crocs Brand Growth Drivers Importance of Sandals to the Crocs Brand • $30B global footwear category • Our molded technologies, accessible price points, and strong go-to-market should allow us to compete effectively • Additional entry point for the Crocs Brand • High purchase frequen
Slide 15: Expect Strong Sandal Growth in 2023
Update on Select Crocs Brand Growth Drivers Expect Strong Sandal Growth in 2023 ~$400 We expect strong sandal growth for the Crocs Brand in 2023 due to planned newness, such as: ~$310 • Additional height Q1 2023 • New uppers in popular Brooklyn style +65% YoY Revenue • Echo Slide Growth Significant
Slide 16: Focus on Four Categories to Drive Growth
Update on Select Crocs Brand Growth Drivers Focus on Four Categories to Drive Growth Everyday Style Street / Sport Adventure Broad-reaching, iconic franchises with Trend-driven with extended price Culturally relevant, rooted in street Functional design leveraging Crocs opening price points, personal
Slide 17: Growing Crocs Brand Momentum Internationally
Update on Select Crocs Brand Growth Drivers Growing Crocs Brand Momentum Internationally Asia Pacific Revenues EMEALA Revenues CC GROWTH(1) +22% +47% +52% +46% +47% +37% China revenues grew over 110% CC(1) in the first quarter 1. Revenue dollars in millions. Revenue growth on a constant currency bas
Slide 18: Crocs Product & Marketing Innovation
Update on Select Crocs Brand Growth Drivers Crocs Product & Marketing Innovation In 2023 we expect: • Record new product introductions • Strong pipeline of 60+ global brand partnerships across a healthy mix of celebrities, mega brands and licenses – of which ~25% will be regionally led • Invest a re
Slide 19: Crocs Marketing Highlights
Update on Select Crocs Brand Growth Drivers Crocs Marketing Highlights Select Partnerships • Sports licensing with NBA and MLB • Hello Kitty & Friends • Minecraft • Melting Sadness (China) • Western Hydro Research Select Marketing Campaigns & Media • New York Times feature emphasizing continued mome
Slide 20: HEYDUDE Update
HEYDUDE Update 20
Slide 21: Progress through Q1 2023
HEYDUDE Update Progress through Q1 2023 2022 • Acquisition exceeded expectations with brand revenues of nearly $1B(1), EPS accretion and significant debt paydown in the first year • Staffed the entire leadership team and hired over 150 roles • Stabilized and expanded the manufacturing footprint • De
Slide 22: HEYDUDE Wholesale Transformation
HEYDUDE Update HEYDUDE Wholesale Transformation 2022 Wholesale Revenues(1) 2-Year Total Brand Revenue Growth(2) $574 108% ~ $220 ~93% $163 $182 ~ $355 ~ $60 ~ $70 ~ $90 ~ $120 Q2 2022 Q3 2022 FY 2022 Q1 2023A FY 2023E Comp Non-Comp In 2022, we began to open strategic US Wholesale accounts and elimin
Slide 23: Strong Sell Out and Exceptional Brand Health
HEYDUDE Update Strong Sell Out and Exceptional Brand Health Q1 2023 Sell Out Increased Strong Double-Digits(1) Exceptional Brand Health(2) 143% • Best-in-class NPS that is 50% higher than competition • #1 casual brand for US men and women 41% • #7 favorite footwear brands for US teens • Top growth b
Slide 24: Committed to long-term sustainable growth of the HEYDUDE brand
HEYDUDE Update We are committed to long-term sustainable growth and success of the HEYDUDE brand • Building relationships with large, strong key accounts • Eliminating non-strategic accounts • Cleaning up Amazon marketplace • Implementing MAP pricing • Reducing digital selling rights to key accounts
Slide 25: Q1 Financial Highlights
Q1 Financial Highlights 25
Slide 26: Q1 2023 Financial Highlights
Q1 Financial Highlights Q1 2023 Financial Highlights B/(W) Q1 vs. PY Revenues ($M) $884 +36%(1) Gross Margin 53.9% +470 bp Adjusted Gross Margin(2) 54.2% 30 bp Adjusted SG&A as % of 26.3% 100 bp Revenue(2) Operating Margin 26.6% 860 bp Adjusted Operating Margin(2) 27.9% 130 bp Diluted EPS $2.39 +101
Slide 27: Q1 2023 Revenue Growth by Brand
Q1 Financial Highlights $884M $649M $235M HEYDUDE Brand Crocs, Inc. Crocs Brand +34% / 36% CC(1) +19% / 22% CC(1) +106% CC / +15% PF(1) Q1 2023 Revenue Growth +12% +19% 30% Crocs Brand Digital Crocs Brand DTC Sales CC Growth(1,2) Digital Penetration(2) Comp Growth(3) 1. Revenue growth on a constant
Slide 28: Q1 Channel Breakdown
Q1 Financial Highlights Q1 Channel Breakdown 1. Digital sales include Crocs.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando) 28
Slide 29: Crocs Brand Q1 Highlights
Q1 Financial Highlights Crocs Brand Q1 Highlights • Revenues +22% CC vs. PY ◦ North America DTC comparable sales +12% ◦ Asia Pacific +55% CC vs. PY ◦ EMEALA +25% CC vs. PY • Crocs ranked #6 preferred footwear brand for teens, equivalent to Spring '22, in Piper Sandler's Spring 2023 Taking Stock with
Slide 30: HEYDUDE Brand Q1 Highlights
Q1 Financial Highlights HEYDUDE Brand Q1 Highlights • Revenues of $235M, +106% CC vs PY / +15% on a PF basis(1) • HEYDUDE ranked #1 in casual footwear for men and women in L.E.K. report on footwear and apparel brand heat • HEYDUDE ranked #8 preferred footwear brand for teens, up from Spring '22, in
Slide 31: Financial Outlook
Financial Outlook 31
Slide 32: 2023E Guidance
Financial Outlook 2023E Guidance (numbers on reported basis, unless otherwise noted) Q2 2023E FY 2023E Total Revenue Growth 6% to 9% 11% to 14%(1) Revenue Growth -- 7% to 9%(1) Reported Revenue Growth -- Mid-20% Pro Forma Revenue Growth -- Mid-teens(2) Adjusted Operating Margin(3) 26.0% 26.0% to 27.
Slide 33: Capital Allocation Priorities
Financial Outlook Deleverage to Balance Business <2.0x Gross Deleveraging Investment Leverage by and Share June 30, 2023 Repurchase Capital Allocation Priorities Committed to working Invest to support long- Long-term target of towards deleveraging term, profitable growth 1.0-1.5x net leverage quickl
Slide 34: Deleveraging Remains on Track
Financial Outlook Deleveraging Remains on Track Gross Debt / Adjusted EBITDA Outlook(1) ◦ Committed to quickly deleveraging 3.1x ◦ Forecasting to be below 2.0x adjusted gross 2.1x leverage by June 30, 2023 Long Term Target ≤ 2.0x 1.0x - 1.5x ◦ We expect to resume net leverage share repurchases in Q3
Slide 35: Appendix
Appendix 35
Slide 36: 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 37: Non-GAAP Reconciliation
Appendix Non-GAAP Reconciliation Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended March 31, 2023 2022 (in thousands) GAAP revenues $ 884,166 $ 660,148 GAAP cost of sales $ 407,796 $ 335,224 (1,191) Distribution centers (1) (3,281) HEYDUDE inventory fair value
Slide 38: 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 March 31, 2023 2022 (in thousands) GAAP revenues $ 884,166 $ 660,148 GAAP selling, general and
Slide 39: Non-GAAP Reconciliation (Cont'd)
Appendix Non-GAAP Reconciliation (Cont'd) Non-GAAP Income from Operations and Operating Margin Reconciliation: Three Months Ended March 31, 2023 2022 (in thousands) GAAP revenues $ 884,166 $ 660,148 GAAP income from operations $ 234,928 $ 118,677 Non-GAAP cost of sales adjustments (1) 3,281 30,918 N
Slide 40: 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 March 31, 2023 2022 (in thousands) GAAP income from operations $ 234,928 $ 118,677 GAAP income before income taxes 191,766 99,060 Non-GAAP income from operations
Slide 41: Non-GAAP Reconciliation (Cont'd)
Appendix Non-GAAP Reconciliation (Cont'd) Non-GAAP Earnings Per Share Reconciliation: Three Months Ended March 31, 2023 2022 (in thousands, except per share data) Numerator: GAAP net income $ 149,543 $ 72,760 Non-GAAP cost of sales adjustments (1) 3,281 30,918 Non-GAAP selling, general and administr
Slide 42: Non-GAAP Reconciliation (Cont'd)
Appendix Non-GAAP Reconciliation (Cont'd) Reconciliation of GAAP to Non-GAAP Financial Guidance: Full Year 2023: Approximately: Non-GAAP operating margin and operating income reconciliation: GAAP operating margin 25% to 26% Non-GAAP adjustments, primarily related to capital investments to support gr
Slide 43: Non-GAAP Reconciliation (Cont'd)
Appendix Non-GAAP Reconciliation (Cont'd) Non-GAAP Gross Margin Reconciliation by Brand: Three Months Ended March Three Months Ended March 31, 31, 2023 2022 2023 2022 GAAP Crocs Brand gross margin 55.8 % 49.2 % GAAP HEYDUDE Brand gross margin 49.6 % 25.6 % Non-GAAP adjustments: Non-GAAP adjustments:
Slide 44: Crocs
CROCS ine:
Crocs — Baird's 2023 Global Consumer, Technology & Services Conference on 6ix