Slide 1: Q2 2022 Investor Presentation
Q2 2022 Investor Presentation August 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: Our Vision: 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: Business & Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS 6
Slide 7: CEO Comments on Second Quarter Results
BUSINESS & FINANCIAL HIGHLIGHTS " Iexcited am very proud of our second quarter results, I am particularly by record revenues for the Crocs Brand and the strong growth internationally. HEYDUDE continues to outperform our expectations and we now expect nearly $1 billion in pro forma* revenues this yea
Slide 8: Q2 2022 Revenue Growth Summary
BUSINESS & FINANCIAL HIGHLIGHTS Q2 2022 REVENUE GROWTH SUMMARY $965M $732M $232M Crocs, Inc. Crocs Brand HEYDUDE Brand +51% / 56% CC +14% / 19% CC +96% PF(1) +8% +21% 36% Crocs Brand DTC Digital Sales Growth (Crocs Brand CC) Digital Penetration Comp Growth 1. Assumes the acquisition closed on Januar
Slide 9: Q2 Revenue Breakdown
BUSINESS & FINANCIAL HIGHLIGHTS Q2 REVENUE BREAKDOWN Digital Brand Geography(1) Channel Penetration(2) 1. Geography is for Crocs Brand only. 2. Digital sales include Crocs.com, heydudeshoesusa.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando). 9
Slide 10: Q2 2022 Financial Highlights
BUSINESS & FINANCIAL HIGHLIGHTS Q2 2022 FINANCIAL HIGHLIGHTS B/(W) Q2 vs. PY Revenues ($M) $965 +56%(1) Gross Margin 51.6% (1,010) bp Adjusted Gross Margin(2) 55.2% (660) bp Adjusted SG&A as % of 25.1% 610 bp Revenue(2) Operating Margin 25.7% (480) bp Adjusted Operating Margin(2) 30.1% (60) bp Dilut
Slide 11: Brand Performance
BRAND PERFORMANCE 11
Slide 12: Crocs Brand Q2 Highlights
BRAND PERFORMANCE CROCS BRAND Q2 HIGHLIGHTS • Revenues +19% CC vs. PY and Russia and China negatively impacted growth by ~3% ◦ EMEALA +48% CC vs. PY ◦ Asia Pacific +28% CC vs. PY • Adj. Gross Margin decreased 390 bp driven primarily by freight headwinds of 445 bp including a 340 bp impact of increme
Slide 13: Crocs Brand Q2 Revenue Growth
BRAND PERFORMANCE CROCS BRAND Q2 REVENUE GROWTH Geography +8% +17% / 28% CC +33% / 48% CC Americas Asia EMEALA +21% +8% +35% Channel Digital Sales DTC Wholesale CC Growth CC Growth Comparable Growth 13
Slide 14: Crocs Brand Q2 Revenue Breakdown
BRAND PERFORMANCE CROCS BRAND Q2 REVENUE BREAKDOWN Digital Geography Channel Penetration* * Digital sales include Crocs.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando) 14
Slide 15: 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+ • Double Jibbitz revenues • Increase Asia region to become ~25% of long-term Crocs Brand revenues • Gr
Slide 16: HEYDUDE Brand Q2 Highlights
BRAND PERFORMANCE HEYDUDE BRAND Q2 HIGHLIGHTS • Q2 Revenues of $232M exceeded expectations ◦ Revenue growth of +96% vs PY on a pro forma basis(1) • FY22 Revenues now expected to be nearly $1 billion on a pro forma basis(2) • Introduced an updated brand identity and launched new HEYDUDE brand campaig
Slide 17: HEYDUDE Rebrand
BRAND PERFORMANCE HEYDUDE REBRAND New Brand Identity Brand Marketing 17
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
FINANCIAL OUTLOOK 19
Slide 20: 2022E Guidance
FINANCIAL OUTLOOK 2022E GUIDANCE (numbers on reported basis, unless otherwise noted) Q3 2022E FY 2022E Total Revenues $915 to $955M $3.395 to $3.505B $680 to $700M $2.545 to $2.615B +15% to 18% CC (1) +14% to 17% CC (2) $235 to $255M $850 to $890M(3) Adjusted Operating Margin(4) ~25% to 26%(5) ~26%
Slide 21: Long Term Guidance
FINANCIAL OUTLOOK LONG TERM GUIDANCE* Crocs, Inc. Revenues $5B+ $1B+ $6B+ Revenue Growth 17%+ 20%+ Adjusted Operating Margin 26%+ Adjusted Tax Rate ~25% Capital Expenditures ~3% of revenues * Crocs Brand long-term guidance provided here is on a pre-acquisition standalone basis. Long term for Crocs B
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 do not expect
Slide 23: Leverage Outlook
FINANCIAL OUTLOOK LEVERAGE OUTLOOK Gross Debt / Adjusted EBITDA Outlook(1) ◦ Committed to quickly deleveraging and 3.1x targeting to be below 2.0x gross leverage by 2.8x mid-year 2023 ≤ 2.0x ◦ Share repurchases on hold until gross leverage is <2.0x, which we do not expect to occur in 2022 1.1x Net D
Slide 24: Appendix
APPENDIX 24
Slide 25: Non-GAAP Reconciliation
APPENDIX NON-GAAP RECONCILIATION Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 964,581 $ 640,773 $ 1,624,729 $ 1,100,871 GAAP cost of sales $ 466,848 $ 245,592 $ 802,072
Slide 26: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Selling, General and Administrative Expenses Reconciliation: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 964,581 $ 640,773 $ 1,624,729 $ 1,100,871 GAAP selling, general and administrative
Slide 27: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income from Operations and Operating Margin Reconciliation: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 964,581 $ 640,773 $ 1,624,729 $ 1,100,871 GAAP income from operations $ 247,964 $ 19
Slide 28: 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands) GAAP income from operations $ 247,964 $ 195,322 $ 366,641 $ 320,008 GAAP income before incom
Slide 29: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Earnings Per Share Reconciliation: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (in thousands, except per share data) Numerator: GAAP net income $ 160,315 $ 318,954 $ 233,075 $ 417,352 Non-GAAP cost of sales adjustments
Slide 30: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Reconciliation of GAAP to Non-GAAP Financial Guidance: Third Quarter 2022: Approximately: Non-GAAP operating margin reconciliation: GAAP operating margin 24% to 25% Non-GAAP adjustments, primarily associated with the HEYDUDE integration and duplicate rent (1
Slide 31: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Gross Margin Reconciliation by Brand: Three Months Ended June 30, 2022 2021 GAAP Crocs Brand gross margin 57.7 % 61.7 % Non-GAAP adjustments: Distribution centers (1) 0.2 % 0.1 % Inventory reserve in Russia (2) less than (0.1)% —% Non-GAAP Crocs Bra
Slide 32: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Selling, General and Administrative Expenses Reconciliation by Brand: Three Months Ended June 30, 2022 2021 GAAP Crocs Brand selling, general and administrative expenses as a percent of revenues 23.1 % 24.2 % Non-GAAP adjustments: Impact of shutdown
Slide 33: 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 June 30, 2022 2021 GAAP Crocs Brand operating margin 34.7 % 37.5 % Non-GAAP cost of sales adjustments (1) 0.1 % 0.1 % Non-GAAP selling, general and administrativ