Crocs, Inc. · NASDAQ:CROX
Crocs — UBS Global Consumer and Retail Conference 2023
44 slides from Crocs's conference presentation, Mar 15, 2023
Slide 1: Investor Presentation
Investor Presentation March 2023
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: Business Update
BUSINESS UPDATE ANDREW REES, CHIEF EXECUTIVE OFFICER
Slide 4: Contents
CONTENTS CBUSINESS UPDATE O◦ BUSINESS HIGHLIGHTS N◦ UPDATE ON SELECT GROWTH DRIVERS T EFINANCIAL UPDATE ◦ 2022 FINANCIAL HIGHLIGHTS N ◦ FINANCIAL OUTLOOK T S ◦ APPENDIX 4
Slide 5: Business Highlights
BUSINESS HIGHLIGHTS
Slide 6: Everyone Comfortable In Their Own Shoes
OUR VISION Everyone Comfortable In Their Own Shoes 6
Slide 7: Crocs Inc. Is a Proven Growth Company
OUR STORY CROCS INC. 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 growt
Slide 8: Market Leading Shareholder Returns
OUR RESULTS MARKET LEADING SHAREHOLDER RETURNS VALUE OF $100 INVESTED DECEMBER 31, 2017 Crocs, Inc. Dow Jones US Footwear Index Nasdaq Composite Index S&P 500 $1,200 $1,000 $800 $600 $400 $200 $- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2017 2018 2019 2020 2021 2
Slide 9: Crocs, Inc. Had an Exceptional 2022
BUSINESS HIGHLIGHTS CROCS, INC. HAD AN EXCEPTIONAL 2022 • Revenues of ~$3.6B with growth of 58% constant currency − Crocs Brand revenues +15% to ~$2.66B, or +19% constant currency − HEYDUDE Brand revenues of $896M; on a pro forma basis** revenues increased ~70% to nearly $1B • Reported industry-lead
Slide 10: 2023 Is Off to a Great Start
BUSINESS HIGHLIGHTS 2023 IS OFF TO A GREAT START • Product innovation includes launches of: − Salehe Pollex slide for Crocs − Brooklyn flip for Crocs − Sirocco sneaker for HEYDUDE • Marketing is driving engagement and excitement − Hello Kitty & Friends x Crocs − Houston Livestock Show & Rodeo • Fast
Slide 11: Crocs, Inc. Investment Highlights
BUSINESS HIGHLIGHTS CROCS, INC. INVESTMENT HIGHLIGHTS • A Global Leader in Casual Footwear with $160B Total Addressable Market • Two Iconic, High-Growth Scale Brands Aligned to Long-Term Consumer Trends • Diversified Sources of Growth Across Brands, Categories, Geographies and Channels • Industry-Le
Slide 12: Update on Select Growth Drivers
UPDATE ON SELECT GROWTH DRIVERS
Slide 13: Diversified Sources of Growth
GROWTH DRIVERS DIVERSIFIED SOURCES OF GROWTH Product Brand Penetration Digital Geography(1) Channel Penetration(2) 1. Geography is for Crocs Brand only. 13 13 2. Digital sales include Crocs.com, heydude.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando).
Slide 14: Importance of Sandals to the 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 frequency • Crocs Brand sandal consi
Slide 15: Expect Strong Sandal Growth in 2023
GROWTH DRIVERS EXPECT STRONG SANDAL GROWTH IN 2023 We expect strong sandal growth for the Crocs Brand in 2023 due to: • Planned newness, such as: ◦ Additional height ~$400M ◦ New uppers in popular Brooklyn style ◦ New Mellow flip ~$310M • Significant increase in sandal-specific marketing • Strong br
Slide 16: Focus on 4 Key Categories to Drive Growth
GROWTH DRIVERS FOCUS ON 4 KEY CATEGORIES TO DRIVE GROWTH Broad-reaching, iconic Trend-driven with extended Culturally relevant, rooted in Functional design leveraging franchises with opening price price points and shorter street style and innovation with Crocs brand heritage with points, personaliza
Slide 17: Growing Crocs Brand Momentum Internationally
GROWTH DRIVERS GROWING CROCS BRAND MOMENTUM INTERNATIONALLY Asia Pacific Revenues ($M) EMEALA Revenues ($M) FY20 FY21 FY22 FY20 FY21 FY22 CC GROWTH (1) +22% +47% +46% +47% EIGHT CONSECUTIVE QUARTERS OF DOUBLE-DIGIT INTERNATIONAL REVENUE GROWTH 17 1. Revenue growth on a constant currency basis, which
Slide 18: Crocs Product & Marketing Innovation
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 record amount of marketing – ov
Slide 19: HEYDUDE Progress
GROWTH DRIVERS HEYDUDE PROGRESS • Grew revenue 70% to $986M(1) by expanding distribution in the US with large, important wholesale partners • Staffed the entire leadership team and hired over 150 roles • Stabilized and expanded the manufacturing footprint • Developed a business systems roadmap • Exp
Slide 20: Financial Update
FINANCIAL UPDATE ANNE MEHLMAN, EVP & CHIEF FINANCIAL OFFICER
Slide 21: 2022 Financial Performance
2022 FINANCIAL PERFORMANCE
Slide 22: 2022 Financial Highlights
2022 FINANCIAL PERFORMANCE 2022 FINANCIAL HIGHLIGHTS B/(W) vs. 2022 PY Revenues ($B) $3.55 +58%(1) Gross Margin 52.3% (910) bp Adjusted Gross Margin(2) 54.4% (720) bp Adjusted SG&A as % of 26.7% 490 bp Revenue(2) Operating Margin 23.9% (560) bp Adjusted Operating Margin(2) 27.7% (240) bp Diluted EPS
Slide 23: 2022 Revenue Growth Summary
2022 FINANCIAL PERFORMANCE 2022 REVENUE GROWTH SUMMARY (2) $3.55B $2.66B $896M / $986M PF Crocs, Inc. Crocs Brand HEYDUDE Brand +54% / 58% CC(1) +15% / 19% CC(1) +54% / +70% PF(1) +22% 15% 38% Crocs Brand Digital Crocs Brand DTC Digital Penetration(4) Sales CC Growth(1,4) Comp Growth(3) 1. Revenue g
Slide 24: Crocs Brand FY Highlights
2022 FINANCIAL PERFORMANCE CROCS BRAND FY HIGHLIGHTS • Revenues +19% CC vs. PY (1) ◦ North America DTC comparable sales +12% (1) ◦ EMEALA +47% CC vs. PY (1) ◦ Asia Pacific +47% CC vs. PY (1) • Launched innovative digital marketing campaigns with several collaborators, like Karol G, Spotify, and many
Slide 25: Crocs Brand FY Revenue Growth
2022 FINANCIAL PERFORMANCE CROCS BRAND FY REVENUE GROWTH Geography +6% +35% / 47% CC(1) +32% / 47% CC(1) North America Asia Pacific EMEALA +22% +15% +23% 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 No
Slide 26: Crocs Brand FY Revenue Breakdown
2022 FINANCIAL PERFORMANCE CROCS BRAND FY 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) 26
Slide 27: HEYDUDE Brand FY Highlights
2022 FINANCIAL PERFORMANCE HEYDUDE BRAND FY HIGHLIGHTS • FY Revenues of $896M exceeded previous guidance ◦ Revenue growth of +54% vs PY • Introduced an updated brand identity and launched new HEYDUDE brand campaign • Brand began rollout of influencer strategy with a portfolio of partners • Continuin
Slide 28: Financial Outlook
FINANCIAL OUTLOOK
Slide 29: 2023E Guidance
FINANCIAL OUTLOOK 2023E GUIDANCE (numbers on reported basis, unless otherwise noted) Q1 2023E FY 2023E Total Revenues 27% to 30% 10% to 13%(1,2) Double-digit growth 6% to 8%; 9% to 11% CC(1) Mid-20% growth on a reported basis Adjusted Operating Margin(3) 24% to 25% ~26% Adjusted One Time Costs(4) ~
Slide 30: Capital Allocation Priorities
FINANCIAL OUTLOOK CAPITAL ALLOCATION PRIORITIES Deleverage to <2.0x Gross Balance Business Leverage by Deleveraging and Investment Share Repurchase Mid-2023 Invest to support long-term, Committed to working towards Long-term target of 1.0-1.5x profitable growth deleveraging quickly net leverage 30
Slide 31: 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 2.25x mid-year 2023 ≤ 2.0x ◦ Share repurchases on hold until gross leverage is <2.0x, which we expect to occur by mid-2023
Slide 32: Market Leading Shareholder Returns
FINANCIAL OUTLOOK MARKET LEADING SHAREHOLDER RETURNS VALUE OF $100 INVESTED DECEMBER 31, 2017 Crocs, Inc. Dow Jones US Footwear Index Nasdaq Composite Index S&P 500 $1,200 $1,000 $800 $600 $400 $200 $- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2017 2018 2019 2020
Slide 33: Appendix
APPENDIX
Slide 34: 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 35: Non-GAAP Reconciliation
APPENDIX NON-GAAP RECONCILIATION Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 945,162 $ 586,626 $ 3,554,985 $ 2,313,416 GAAP cost of sales $ 448,839 $ 214,602 $ 1,694,
Slide 36: 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: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 945,162
Slide 37: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income from Operations and Operating Margin Reconciliation: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 (in thousands) GAAP revenues $ 945,162 $ 586,626 $ 3,554,985 $ 2,313,416 GAAP income from operations $ 220,052 $
Slide 38: 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 December Year Ended 31, December 31, 2022 2021 2022 2021 (in thousands) GAAP income from operations $ 220,052 $ 159,988 $ 850,756 $ 683,064 GAAP income before inc
Slide 39: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Earnings Per Share Reconciliation: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 (in thousands, except per share data) Numerator: GAAP net income $ 137,735 $ 154,853 $ 540,159 $ 725,694 Non-GAAP cost of sales adjustment
Slide 40: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Reconciliation of GAAP to Non-GAAP Financial Guidance: First Quarter 2023: Approximately: Non-GAAP operating margin reconciliation: ($ in millions, except per share data) GAAP operating margin 23% to 24% $190 to $200 Non-GAAP adjustments, primarily related t
Slide 41: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Gross Margin Reconciliation by Brand: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 GAAP Crocs Brand gross margin 55.3 % 63.4 % 56.3 % 61.4 % Non-GAAP adjustments: Distribution centers (1) 0.9 % 0.3 % 0.4 % 0.3 % Invent
Slide 42: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Selling, General and Administrative Expenses Reconciliation by Brand: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 GAAP Crocs Brand selling, general and administrative expenses as a percent of revenues 25.4 % 26.2 % 24
Slide 43: Non-GAAP Reconciliation (Cont'd)
APPENDIX NON-GAAP RECONCILIATION (CONT’D) Non-GAAP Income from Operations and Operating Margin Reconciliation by Brand: Year Ended Three Months Ended December 31, December 31, 2022 2021 2022 2021 GAAP Crocs Brand operating margin 29.9 % 37.2 % 32.0 % 37.2 % Non-GAAP cost of sales adjustments (1) 0.8
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Crocs — UBS Global Consumer and Retail Conference 2023 on 6ix