Slide 1: Q3 2023 Investor Presentation
Q3 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 • Q3 Highlights • Q3 Financial Review • Appendix
Slide 4: Q3 Highlights
Q3 Highlights 4
Slide 5: Q3 Highlights: CEO commentary on strong third quarter
Q3 HIGHLIGHTS We delivered a strong third quarter, exceeding the high-end of our guidance, led by double- digit revenue growth in our Crocs Brand supported by healthy full-price selling and industry-leading operating margins. Both our brands gained share during the back-to-school season. During the
Slide 6: Q3 2023 Highlights
Q3 HIGHLIGHTS Q3 2023 Highlights (1) • Revenues of $1,046M, +6% CC (1) ◦ Crocs Brand revenues of $799M, +11% CC (1) ▪ Asia revenues up +29% CC ; China >+90% CC (1) ▪ North America revenues +8% CC driven by newer products such as Echo, Mega Crush ▪ DTC comparable sales growth +15% (1) ◦ HEYDUDE Brand
Slide 7: Diversifying the Crocs Clog Silhouette
Q3 HIGHLIGHTS Diversifying the Crocs Clog Silhouette Echo Mega Siren 7
Slide 8: Importance of Sandals to the Crocs Brand
Q3 HIGHLIGHTS Importance of Sandals to the Crocs Brand • Sandals are a key strategic pillar in $30B global category • Revenues +6% YoY on top of nearly 20% growth in 2022; +35% TTM • Additional entry point for the Crocs Brand • Crocs Brand sandal consideration is on par with that of clogs • We expec
Slide 9: Recent Crocs Product & Marketing Wins
Q3 HIGHLIGHTS Recent Crocs Product & Marketing Wins 9
Slide 10: Asia is an Important Driver of Long-Term Growth
Q3 HIGHLIGHTS Asia is an Important Driver of Long-Term Growth In Asia, growth was Asia Pacific Revenues ($M) broad-based with $604 strong brand momentum throughout AG R $474 the region including %C 30 Australia, China, South Korea and Southeast $350 Asia. $279 China revenues grew over 90% in the thi
Slide 11: Crocs Brand China Update
Q3 HIGHLIGHTS Crocs Brand China Update Crocs has a passionate fan base with ~60M uses of the hashtag 洞门, meaning “clogs followers” on RED Big Brand Day Siren Clog sold out in first day as height Feng Chen Wang Crocs x GOODBAI Zhou Yutong resonated with consumers 11
Slide 12: HEYDUDE Back-To-School Product Highlights
Q3 HIGHLIGHTS HEYDUDE Back-To-School Product Highlights Wally Sox Micro Wendy Funk Mono Sirocco Sneaker Black Electric Pink 12
Slide 13: Recent HEYDUDE Marketing Wins
Q3 HIGHLIGHTS Recent HEYDUDE Marketing Wins Key Stats Back to Campus Brand awareness up to 32% (1) from 18% in 5 months HEYDUDE ranked #7 favorite (2) footwear brand Mindshare up ~3x (2) In underpenetrated markets 1. Per Internal Brand Health Tracker Studies performed in April and September 2023 2.
Slide 14: Strategic Wholesale Account Update
Q3 HIGHLIGHTS Strategic Wholesale Account Update Wholesale Sales Mix Q3 2022 Q3 2023 Strategic +28% 39% YoY strategic Strategic 50% account (1) sell-out 1. Sell-out revenue for wholesale based on SPS and excludes gray market sales 14
Slide 15: Progress of Account Rationalization
Q3 HIGHLIGHTS Progress of Account Rationalization Expect cleaner account base to begin 2024 having: ~1,300 • Curtailed over 50% of non-strategic accounts in 2023 # Accounts • Pulled-back on digital ~600 rights for accounts that Over 50% ~(700) fall outside of our reduction strategic alliance account
Slide 16: Q3 Financial Review
Q3 Financial Review CROCS ine:
Slide 17: Q3 2023 Financial Highlights
Q3 FINANCIAL HIGHLIGHTS Q3 2023 Financial Highlights B/(W) Q3 vs. PY (1) Revenues ($M) $1,046 +6% Gross Margin 55.6% +70 bp (2) Adjusted Gross Margin 57.4% +230 bp Adjusted SG&A as % of (2) 29.1% (190) bp Revenue Operating Margin 26.2% (60) bp (2) Adjusted Operating Margin 28.3% +40 bp Diluted EPS $
Slide 18: Diversified Sources of Growth
Q3 FINANCIAL HIGHLIGHTS Diversified Sources of Growth Brand Geography EMEALA North America 17% HEYDUDE 67% 25% Asia Pacific 16% Crocs TTM Q3 2023 75% Revenue Breakdown (1) 40% of Crocs Brand TTM sales were from Digital Penetration Channel International markets Digital 38% DTC WHL 47% 53% Note: Data
Slide 19: Crocs Brand Q3 Revenue Highlights
Q3 FINANCIAL HIGHLIGHTS Crocs Brand Q3 Revenue Highlights Q3 Revenues of $799M (1) (1) Q3 Revenue Driver Growth Rates Q3 Product Growth Rates 15% 11% 15% DD+ 6% (4)% Pairs ASP Revenues Decline driven largely by curtailment of significant African distributor believed to be diverting goods to the U.S.
Slide 20: Crocs Brand Q3 Regional Revenue Highlights
Q3 FINANCIAL HIGHLIGHTS Crocs Brand Q3 Regional Revenue Highlights (1) Q3 Revenue Growth Q3 DTC Comparable-Sales Growth 28.6% 38.1% 22.3% 8.2% 10.2% 2.7% Asia Pacific North America EMEALA Asia Pacific North America EMEALA 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial
Slide 21: HEYDUDE Q3 Revenue Results
Q3 FINANCIAL HIGHLIGHTS HEYDUDE Q3 Revenue Results (1) Q3 Revenues of $247M YoY Digital growth of 5.6% (1) Channel Growth vs. PY in CC Digital Penetration 14.6% +570bps 41.6% 35.9% (8.5)% (19.7)% DTC WHL HEYDUDE Brand Q3'22 Q3'23 1. Growth on a constant currency basis, which is a Non-GAAP Financial
Slide 22: Q3 Adjusted Gross Margins by Brand
Q3 FINANCIAL HIGHLIGHTS (1) Q3 Adjusted Gross Margins by Brand +460bps (600)bps +230bps 62.1% 57.5% 55.1% 57.4% 48.8% 42.8% Q3'22 Q3'23 Q3'22 Q3'23 Q3'22 Q3'23 1. See reconciliation to GAAP equivalents in Appendix. 22
Slide 23: Best-in-Class Adjusted Operating Margins
Q3 FINANCIAL HIGHLIGHTS (1) Best-in-Class Adjusted Operating Margins +430bps (920)bps +40bps 37.4% 33.1% 29.3% 27.9% 28.3% 20.1% Q3'22 Q3'23 Q3'22 Q3'23 Q3'22 Q3'23 1. See reconciliation to GAAP equivalents in Appendix. 23
Slide 24: Capital Allocation
Q3 FINANCIAL HIGHLIGHTS Capital Allocation Gross Leverage Ratio ◦ Committed to quickly 2.25x deleveraging - repaid $940M since the 2.1x acquisition 1.8x ◦ Met our goal to be 1.7x below 2.0x gross Net Leverage: leverage by mid-year 1.0x - 1.5x 2023 ◦ Debt paydown of $90M; Repurchased $150M of shares
Slide 25: Healthy Inventory Position
Q3 FINANCIAL HIGHLIGHTS Healthy Inventory Position Inventory Balance ($M) 24% YoY dec rease $514 $472 $190 $390 $169 $111 $324 $303 $279 Q3 2022 YE 2022 Q3 2023 Crocs HEYDUDE 25
Slide 26: FY2023E Guidance
Q3 FINANCIAL HIGHLIGHTS FY2023E Guidance (numbers on reported basis, unless otherwise noted) Prior Guidance Current Guidance Δ (1) 12.5% to 14.5% ~10% to 11% Total Revenue Growth ($95) to ($125M) $4.0 to $4.065B $3.905 to $3.940B Revenue Growth 12% to 13% ~12% to 13% Reported Revenue Growth 14% to 1
Slide 27: Q4 2023E Guidance
Q3 FINANCIAL HIGHLIGHTS Q4 2023E Guidance (numbers on reported basis, unless otherwise noted) Q4 2023E (1) Total Revenue Growth (4)% to (1)% Revenue Growth 4% to 7% Revenue Growth (25)% to (20)% (2) Adjusted Operating Margin ~21.0% (2) Adjusted Diluted EPS $2.05 to $2.35 1. Crocs Inc. expected reven
Slide 28: Appendix
Appendix 28
Slide 29: 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 30: Non-GAAP Reconciliation
APPENDIX Non-GAAP Reconciliation Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended September 30, 2023 2022 (in thousands) GAAP revenues $ 1,045,717 $ 985,094 GAAP cost of sales $ 464,081 $ 443,792 (1) Distribution centers (18,797) (2,316) (2) HEYDUDE inventory
Slide 31: Non-GAAP Reconciliation (Cont'd)
APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Gross Margin Reconciliation by Brand: Three Months Ended September 30, Three Months Ended September 30, 2023 2022 2023 2022 GAAP Crocs Brand gross margin 61.9 % 57.3 % GAAP HEYDUDE Brand gross margin 35.6 % 48.8 % Non-GAAP adjustments: Non-GAAP adju
Slide 32: 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, 2023 2022 2023 2022 (in thousands) GAAP revenues
Slide 33: Non-GAAP Reconciliation (Cont'd)
APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP selling, general and administrative expenses as a percent of revenues reconciliation by Brand: Three Months Ended September 30, 2023 2022 GAAP Crocs Brand selling, general and administrative expenses as a percent of revenues 24.7 % 24.4 % (1) Non-GA
Slide 34: 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, 2023 2022 2023 2022 (in thousands) GAAP revenues $ 1,045,717 $ 985,094 $ 3,002,250 $ 2,609,823 GAAP income from operations $
Slide 35: Non-GAAP Reconciliation (Cont'd)
APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Operating Margin Reconciliation by Brand: Three Months Ended September 30, 2023 2022 GAAP Crocs Brand operating margin 37.2 % 32.9 % (1) Non-GAAP costs of sales adjustments 0.1 % 0.2 % (2) Non-GAAP SG&A adjustments 0.1 % —% Non-GAAP Crocs Brand oper
Slide 36: 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, 2023 2022 2023 2022 (in thousands) GAAP income from operations $ 273,852 $ 264,063 $ 827,269 $ 630,704 GAAP income b
Slide 37: 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, 2023 2022 2023 2022 (in thousands, except per share data) Numerator: GAAP net income $ 177,025 $ 169,349 $ 538,980 $ 402,424 (1) Non-GAAP cost of sal
Slide 38: 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 25.5% (1) Non-GAAP adjustments, primarily related to investments to support growth 1.5%
Slide 39: Crocs, Inc.
CROCS inc: