Slide 1: Q2 2023 Investor Presentation
Q2 2023 Investor Presentation
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 • Q2 Highlights • Q2 Financial Review • Appendix 3
Slide 4: Q2 Highlights
Q2 Highlights 4
Slide 5: Record quarterly revenues of over $1 billion
Q2 HIGHLIGHTS We achieved record quarterly revenues of over $1 billion, representing growth of 12.0% on a constant currency basis to prior year. Both the Crocs and HEYDUDE brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26.0% in
Slide 6: Q2 2023 Highlights
Q2 HIGHLIGHTS Q2 2023 Highlights (1) • Revenues of $1,072 million, +12% CC (1) ◦ Crocs Brand revenues of $833M, +15% CC (1) ▪ Asia revenues up +39% CC ▪ DTC comparable sales growth +20% (1) ▪ North America revenues +13% CC driven by sandals and new product introductions (1) ◦ HEYDUDE Brand revenues
Slide 7: Diversifying the Crocs Clog Silhouette
Q2 HIGHLIGHTS Diversifying the Crocs Clog Silhouette Echo Dylan Siren 7
Slide 8: Importance of Sandals to the Crocs Brand
Q2 HIGHLIGHTS Importance of Sandals to the Crocs Brand • $30B global footwear category • Our molded technologies, accessible price points, and strong go-to-market allow us to compete effectively • Additional entry point for the Crocs Brand • High purchase frequency • Crocs Brand sandal consideration
Slide 9: Recent Crocs Collaborations
Q2 HIGHLIGHTS Recent Crocs Collaborations 9
Slide 10: Asia is an Important Driver of Long-Term Growth
Q2 HIGHLIGHTS Asia is an Important Driver of Long-Term Growth In Asia, growth was Asia Pacific Revenues ($M) broad-based with strong brand $567 momentum throughout AG R $474 the region including %C 30 China, Australia, South Korea and Southeast $350 Asia. $279 China revenues grew triple-digits in th
Slide 11: Crocs Brand China Update
Q2 HIGHLIGHTS Crocs Brand China Update #1 in sales on Douyin during Mid-Season Festival #2 in sales of casual footwear on Tmall during Mid-Season Bai Jingting Zhou Yutong Crocs x Labelhood Festival 11
Slide 12: Exceptional HEYDUDE DTC Growth
Q2 HIGHLIGHTS Exceptional HEYDUDE DTC Growth (1) Q2 Revenue Growth 37% 30% DTC Digital 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 12
Slide 13: Creating Excitement with New Product Introductions
Q2 HIGHLIGHTS Creating Excitement with New Product Introductions Americana Funk Washed Canvas Sirocco 13
Slide 14: Driving Increased Brand Awareness
Q2 HIGHLIGHTS Driving Increased Brand Awareness Mossy Oak Back to Campus 14
Slide 15: HEYDUDE Wholesale Transformation
Q2 HIGHLIGHTS HEYDUDE Wholesale Transformation 2-Year Total Brand (2,3) 2022 Wholesale Revenues (1) ($M) Revenue Growth In 2022, we began to open strategic US ~$575 102% Wholesale accounts and $220 eliminate non-strategic ~ 80% accounts. $355 This will result in challenging Wholesale ~$180 ~$160 com
Slide 16: Strong Sell Out and Exceptional Brand Health
Q2 HIGHLIGHTS Strong Sell Out and Exceptional Brand Health (1) (2) Q2 2023 Sell Out Increased Strong Double-Digits Exceptional Brand Health • Best-in-class NPS of 71, which is 50% higher than competition • #1 casual brand for US men and women 86% • #7 favorite footwear brands for US teens 30% • Top
Slide 17: Digital-First Approach for Both Brands
Q2 HIGHLIGHTS Digital-First Approach for Both Brands (1) Q2 Digital Revenue Growth Q2 Digital Share of Revenue 42% 37% 38% 39% 21% 17% 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 17
Slide 18: Q2 Financial Review
Q2 Financial Review CROCS ine:
Slide 19: Q2 2023 Financial Highlights
Q2 FINANCIAL HIGHLIGHTS Q2 2023 Financial Highlights B/(W) Q2 vs. PY (1) Revenues ($M) $1,072 +12% Gross Margin 57.9% +630 bp (2) Adjusted Gross Margin 58.1% +290 bp Adjusted SG&A as % of (2) 27.8% (270) bp Revenue Operating Margin 29.7% +400 bp (2) Adjusted Operating Margin 30.3% +20 bp Diluted EPS
Slide 20: Diversified Sources of Growth
Q2 FINANCIAL HIGHLIGHTS Diversified Sources of Growth Brand Geography EMEALA 16% North America HEYDUDE 69% 26% Asia Pacific 15% Crocs TTM Q2 2023 74% Revenue Breakdown (1) 40% of Crocs Brand TTM sales were from Digital Penetration Channel International markets Digital 38% DTC WHL 46% 54% Note: Data
Slide 21: Crocs Brand Q2 Revenue Highlights
Q2 FINANCIAL HIGHLIGHTS Crocs Brand Q2 Revenue Highlights Q2 Revenues of $833M (1) (1) Q2 Revenue Driver Growth Rates Q2 Product Growth Rates 15% 34% 13% 13% DD+ 2% Pairs ASP Revenues Clogs Sandals Jibbitz 1. ASP, revenue, and product growth on a constant currency basis, which is a Non-GAAP Financia
Slide 22: Crocs Brand Q2 Regional Revenue Highlights
Q2 FINANCIAL HIGHLIGHTS Crocs Brand Q2 Regional Revenue Highlights (1) Q2 Revenue Growth Q2 DTC Comparable Sales Growth 39.0% 40% 39% 12.5% 13% (1.4)% Asia Pacific North America EMEALA Asia Pacific North America EMEALA 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Mea
Slide 23: HEYDUDE Q2 Revenue Highlights
Q2 FINANCIAL HIGHLIGHTS HEYDUDE Q2 Revenue Highlights (1) Q2 Revenues of $239M YoY Digital growth of 36.6% (1) Channel Growth vs. PY in CC Digital Penetration +1,030bps 29.7% 41.8% 31.5% 2.9% (8.5)% DTC WHL HEYDUDE Brand Q2 2022 Q2 2023 1. Growth on a constant currency basis, which is a Non-GAAP Fin
Slide 24: Adjusted Gross Margins
Q2 FINANCIAL HIGHLIGHTS Adjusted Gross Margins +410bps 0bps +290bps 62.0% 57.9% 58.1% 55.2% 47.1% 47.1% Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 24
Slide 25: Best-in-Class Adjusted Operating Margins
Q2 FINANCIAL HIGHLIGHTS Best-in-Class Adjusted Operating Margins +350bps (500bps) +20bps 38.4% 34.9% 32.6% 30.1% 30.3% 27.6% Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 25
Slide 26: Rapid Deleveraging
Q2 FINANCIAL HIGHLIGHTS Rapid Deleveraging (1) Gross Leverage ◦ Committed to quickly deleveraging - repaid 3.1x $850M since the acquisition 2.1x ◦ Met our goal to be 1.8x Long Term below 2.0x gross Target: leverage by mid-year 1.0x - 1.5x 2023 net leverage 1.1x ◦ Share repurchases resumed in Q3 2023
Slide 27: Healthy Inventory Position
Q2 FINANCIAL HIGHLIGHTS Healthy Inventory Position Inventory Balance ($M) 13.0% YOY d ecrease $502 $472 $436 $167 $169 $130 $335 $303 $307 Q2 2022 YE 2022 Q2 2023 Crocs HEYDUDE 27
Slide 28: FY2023E Guidance
Q2 FINANCIAL HIGHLIGHTS FY2023E Guidance (numbers on reported basis, unless otherwise noted) Prior Guidance Current Guidance B/(W) Total Revenue Growth 11% to 14% 12.5% to 14.5%(1) +0.5% to 1.5% Revenue Growth 7% to 9% 12% to 13% +4% to 5% Reported Revenue Growth Mid-20% 14% to 18% (2) -- Pro Forma
Slide 29: Q3 2023E Guidance
Q2 FINANCIAL HIGHLIGHTS Q3 2023E Guidance (numbers on reported basis, unless otherwise noted) Q3 2023E (1) Total Revenue Growth 3% to 5% Revenue Growth -- Revenue Growth -- (2) Adjusted Operating Margin ~27.0% (2) Adjusted Diluted EPS $3.07 to $3.15 1. Crocs Inc. expected revenue growth at currency
Slide 30: Q&A
Q&A 30
Slide 31: Appendix
Appendix 31
Slide 32: 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,” “No
Slide 33: 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, 2023 2022 2023 2022 (in thousands) GAAP revenues $ 1,072,367 $ 964,581 $ 1,956,533 $ 1,624,729 GAAP cost of sales $ 451,060 $ 466,848 $ 858,85
Slide 34: Non-GAAP Reconciliation (Cont'd)
APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Gross Margin Reconciliation by Brand: Three Months Ended June 30, Three Months Ended June 30, 2023 2022 2023 2022 GAAP Crocs Brand gross margin 61.9 % 57.7 % GAAP HEYDUDE Brand gross margin 47.1 % 32.4 % Non-GAAP adjustments: Non-GAAP adjustments: (
Slide 35: 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 (in thousands) GAAP revenues $ 1,072,367
Slide 36: 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, 2023 2022 2023 2022 (in thousands) GAAP revenues $ 1,072,367 $ 964,581 $ 1,956,533 $ 1,624,729 GAAP income from operations $ 318,489 $
Slide 37: 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, 2023 2022 2023 2022 (in thousands) GAAP income from operations $ 318,489 $ 247,964 $ 553,417 $ 366,641 GAAP income before incom
Slide 38: 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, 2023 2022 2023 2022 (in thousands, except per share data) Numerator: GAAP net income $ 212,412 $ 160,315 $ 361,955 $ 233,075 (1) Non-GAAP cost of sales adjustme
Slide 39: 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 26.6% (1) Non-GAAP adjustments, primarily related to investments to support growth 0.9%
Slide 40: Crocs, Inc.
CROCS inc: