Reiterates Full Year 2024 Revenue Growth of 3% to 5%
BROOMFIELD, Colo., Feb. 15, 2024 /PRNewswire/ — Crocs, Inc. (NASDAQ:CROX), a world leader in innovative casual footwear for all, today announced its fourth quarter and full year 2023 financial results.
“We delivered a record year for Crocs Inc. capped off by a strong fourth quarter that exceeded expectations across all metrics. Revenues of nearly $4 billion grew over 11% underpinned by industry-leading operating margins and double-digit earnings per share growth. Crocs Brand grew across all regions and channels, highlighting the power of our strategy and disciplined execution. We made good progress in the fourth quarter towards returning our HEYDUDE Brand to a pull-market position resulting in improved gross margins and healthy inventory levels exiting the year,” said Andrew Rees, Chief Executive Officer. “We are starting off 2024 from a position of strength and taking the opportunity to reinvest into several key strategic areas as we continue to lay the foundation for durable market share gains.”
Amounts referred to as “Adjusted” or “Non-GAAP” are Non-GAAP measures and include adjustments that are described under the heading “Reconciliation of GAAP Measures to Non-GAAP Measures.” A reconciliation of these amounts to their GAAP counterparts are contained in the schedules below.
Fourth Quarter 2023 Operating Results
Revenues were $960 million, an increase of 1.6% from the same period last year, or 1.5% on a constant currency basis. Direct-to-consumer (“DTC”) revenues grew 6.8% and wholesale revenues contracted 4.6%. By brand, Crocs revenues were $732 million, an increase of 10.0% from the same period last year, or 9.9% on a constant currency basis. HEYDUDE revenues were $228 million, a decrease of 18.5% from the same period last year, or 18.7% on a constant currency basis.
Gross margin was 55.3% compared to 52.5% in the prior year. Adjusted gross margin improved 240 basis points to 55.7% compared to 53.3% in the same period last year.
Selling, general, and administrative expenses (“SG&A”) of $321 million increased from $276 million in the same period last year, and SG&A as a percent of revenues rose to 33.5% from 29.2% in prior year. Adjusted SG&A increased to 31.6% of revenues versus 27.3% for the same period last year.
Income from operations decreased 4.8% to $210 million and operating margin fell to 21.8%, compared to 23.3% for the same period last year. Adjusted income from operations fell 6.0% to $231 million and adjusted operating margin fell to 24.1% from 26.0%.
Diluted earnings per share were $4.16 as compared to $2.20 for the same period last year due to an increased tax benefit. Adjusted diluted earnings per share decreased 2.6% to $2.58 compared to $2.65 for the same period last year.
During the quarter $277 million of debt was repaid, and we reduced gross leverage to 1.5x and net leverage to 1.3x. We repurchased approximately 0.3 million shares for $25 million at an average share price of $86.34. At year end, $875 million of share repurchase authorization remained available for future repurchases.
2023 Operating Results
Record revenues of nearly $4.0 billion increased 11.5%, or 12.0% on a constant currency basis, over 2022.
Gross margin of 55.8% increased 350 basis points compared to 52.3% last year. Adjusted gross margin of 56.5% rose 210 basis points from last year.
SG&A expenses of $1,173 million increased from $1,010 million last year and as a percent of revenues increased by 120 basis points to 29.6%. Adjusted SG&A increased to 28.7% of revenues versus 26.7% last year.
Income from operations increased 21.9% to $1,037 million from $851 million last year. Operating margin increased 230 basis points to 26.2% from 23.9% compared to last year. Adjusted income from operations increased 11.4% to $1,099 million and adjusted operating margin was flat at 27.7% compared to last year.
Diluted earnings per share increased 46.8% to $12.79 per share. Adjusted diluted earnings per share increased 10.2% to $12.03, which excludes the fourth-quarter tax benefit.
2023 Brand Summary
Crocs Brand: Revenues increased 13.3%, or 14.0% on a constant currency basis, to $3.0 billion. Wholesale revenues increased 8.4%, or 9.3% on a constant currency basis. DTC revenues rose 18.5%, or 19.0% on a constant currency basis.
North America: Revenues of $1.8 billion increased 8.1%, or 8.3% on a constant currency basis.
International: Revenues of $1.2 billion increased 21.7%, or 23.2% on a constant currency basis.
HEYDUDE Brand: Revenues increased 6.0% to $949 million. Wholesale revenues decreased 1.3% and DTC revenues increased 18.9%. Including the period prior to the acquisition in February 2022, revenues contracted 3.7%.
Balance Sheet and Cash Flow
Cash and cash equivalents were $149 million as of December 31, 2023, down from $192 million as of December 31, 2022.
Inventories decreased 18.3% to $385 million as of December 31, 2023 compared to $472 million as of December 31, 2022.
Cash provided by operating activities rose 54.3% to $930 million during 2023 compared to $603 million during 2022.
Capital expenditures were $116 million during 2023 compared to $104 million during 2022.
Borrowings as of December 31, 2023 were $1.66 billion, compared to $2.32 billion as of December 31, 2022, as we repaid $666 million of debt in 2023. Our liquidity position remains strong with $149 million in cash and cash equivalents and $570 million in available borrowing capacity as of December 31, 2023.
Financial Outlook
First Quarter 2024
With respect to the first quarter of 2024, we expect:
Revenues to be down 1.5% to up 0.5% compared to first quarter 2023
Crocs Brand to grow 6% to 8% compared to first quarter 2023
HEYDUDE Brand to contract 23% to 20% compared to first quarter 2023
Adjusted operating margin of approximately 22%
Adjusted diluted earnings per share of $2.15 to $2.25
Full Year 2024
With respect to 2024, we continue to expect:
Revenue growth of 3% to 5% compared to 2023 at currency rates as of December 31, 2023
Revenues for the Crocs Brand to grow 4% to 6%
Revenues for the HEYDUDE Brand flat to slightly up
Adjusted operating margin of approximately 25%
Non-GAAP adjustments of approximately $10 million primarily related to HEYDUDE’s distribution and logistics project, impacting cost of goods sold
Combined GAAP tax rate of approximately 21.5% and Non-GAAP effective tax rate of approximately 18%
Adjusted diluted earnings per share of $12.05 to $12.50. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases
Capital expenditures of approximately $120 to $130 million
Segment Reporting Change
In the fourth quarter of 2023, to reflect changes in the way management evaluates performance, makes operating decisions, and allocates resources, we updated our reportable operating segments to be (i) Crocs Brand and (ii) HEYDUDE Brand. Our ‘North America,’ ‘Asia Pacific,’ and ‘EMEALA’ segments as well as revenues and expenses related to Crocs ‘Brand corporate’ have been consolidated to the ‘Crocs Brand.’ Please refer to our Form 10-K for more detailed information.
Conference Call Information:
A conference call to discuss fourth quarter and full year 2023 results is scheduled for today, February 15, 2024, at 8:30 am ET. To receive conference call details, please register at the Investor Relations section of the Crocs website, investors.crocs.com. The webcast will also be available live and on replay through February 15, 2025 at this site.
About Crocs, Inc.:
Crocs, Inc. (NASDAQ:CROX), headquartered in Broomfield, Colorado, is a world leader in innovative casual footwear for all, combining comfort and style with a value that consumers know and love. The Company’s brands include Crocs and HEYDUDE, and its products are sold in more than 80 countries through wholesale and direct-to-consumer channels. For more information on Crocs, Inc. visit investors.crocs.com. To learn more about our brands, visit www.crocs.com or www.heydude.com. Individuals can also visit https://investors.crocs.com/news-and-events/ and follow both Crocs and HEYDUDE on their social platforms.
Forward Looking Statements:
This press release 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 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements include, but are not limited to, statements regarding potential impacts to our business related to our supply chain challenges, cost inflation, our financial condition, brand and liquidity outlook, and expectations regarding our future revenue, margins, non-GAAP adjustments, tax rate, earnings per share, debt ratios and capital expenditures, share repurchases, the acquisition of HEYDUDE and benefits thereof, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, statements regarding first quarter and full year 2024 financial outlook and future profitability, cash flows, and brand strength, anticipated product portfolio and our ability to deliver sustained, highly profitable growth and create significant shareholder value. These statements involve known and unknown risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: our expectations regarding supply chain disruptions; cost inflation; current global financial conditions; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenues; changing consumer preferences; our ability to maintain and expand revenues and gross margin; our ability to accurately forecast consumer demand for our products; our ability to successfully implement our strategic plans; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of potential adverse currency exchange rate fluctuations and other international operating risks; and other factors described in our most recent Annual Report on Form 10-K under the heading “Risk Factors” and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange Commission.
All information in this document speaks as of February 15, 2024. We do not undertake any obligation to update publicly any forward-looking statements, whether as a result of the receipt of new information, future events, or otherwise, except as required by applicable law.
Category:Investors
CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Revenues
$ 960,097
$ 945,162
$ 3,962,347
$ 3,554,985
Cost of sales
429,400
448,839
1,752,337
1,694,703
Gross profit
530,697
496,323
2,210,010
1,860,282
Selling, general and administrative expenses
321,183
276,271
1,173,227
1,009,526
Income from operations
209,514
220,052
1,036,783
850,756
Foreign currency gains (losses), net
382
4,343
(1,240)
3,228
Interest income
1,181
801
2,406
1,020
Interest expense
(36,444)
(49,801)
(161,351)
(136,158)
Other income (expense), net
(774)
174
(326)
(338)
Income before income taxes
173,859
175,569
876,272
718,508
Income tax expense (benefit)
(79,727)
37,834
83,706
178,349
Net income
$ 253,586
$ 137,735
$ 792,566
$ 540,159
Net income per common share:
Basic
$ 4.19
$ 2.23
$ 12.91
$ 8.82
Diluted
$ 4.16
$ 2.20
$ 12.79
$ 8.71
Weighted average common shares outstanding:
Basic
60,543
61,747
61,386
61,220
Diluted
60,977
62,501
61,952
62,006
Gross margin
55.3 %
52.5 %
55.8 %
52.3 %
Operating margin
21.8 %
23.3 %
26.2 %
23.9 %
Selling, general and administrative expenses as a
percentage of revenues
33.5 %
29.2 %
29.6 %
28.4 %
CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and par value amounts)
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$ 149,288
$ 191,629
Restricted cash — current
2
2
Accounts receivable, net of allowances of $27,591 and $24,493, respectively
305,747
295,594
Inventories
385,054
471,551
Income taxes receivable
4,413
14,752
Other receivables
21,071
18,842
Prepaid expenses and other assets
45,129
33,605
Total current assets
910,704
1,025,975
Property and equipment, net
238,315
181,529
Intangible assets, net
1,792,562
1,800,167
Goodwill
711,588
714,814
Deferred tax assets, net
667,972
528,278
Restricted cash
3,807
3,254
Right-of-use assets
287,440
239,905
Other assets
31,446
7,875
Total assets
$ 4,643,834
$ 4,501,797
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 260,978
$ 230,821
Accrued expenses and other liabilities
285,771
239,424
Income taxes payable
65,952
89,211
Current borrowings
23,328
24,362
Current operating lease liabilities
62,267
57,456
Total current liabilities
698,296
641,274
Deferred tax liabilities, net
12,912
302,030
Long-term income taxes payable
565,171
224,837
Long-term borrowings
1,640,996
2,298,027
Long-term operating lease liabilities
269,769
215,119
Other liabilities
2,767
2,579
Total liabilities
3,189,911
3,683,866
Stockholders’ equity:
Common stock, par value $0.001 per share, 110.1 million and 109.5 million issued, 60.5
million and 61.7 million shares outstanding, respectively
110
110
Treasury stock, at cost, 49.6 million and 47.7 million shares, respectively
(1,888,869)
(1,695,501)
Additional paid-in capital
826,685
797,614
Retained earnings
2,611,765
1,819,199
Accumulated other comprehensive loss
(95,768)
(103,491)
Total stockholders’ equity
1,453,923
817,931
Total liabilities and stockholders’ equity
$ 4,643,834
$ 4,501,797
CROCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2023
2022
Cash flows from operating activities:
Net income
$ 792,566
$ 540,159
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
54,304
39,229
Loss on disposal of assets
419
9,063
Operating lease cost
79,543
66,012
Inventory donations
2,078
2,770
Provision (recovery) for doubtful accounts, net
3,568
1,101
Share-based compensation
29,072
31,303
Asset impairments
9,287
—
Deferred taxes
(410,319)
(4,760)
Other non-cash items
3,401
9,947
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable, net of allowances
(13,317)
(56,766)
Inventories
86,350
(91,614)
Prepaid expenses and other assets
(31,839)
(14,435)
Accounts payable
37,197
41,701
Accrued expenses and other liabilities
46,695
38,629
Right-of-use assets and operating lease liabilities
(75,107)
(63,355)
Income taxes
316,546
54,158
Cash provided by operating activities
930,444
603,142
Cash flows from investing activities:
Purchases of property, equipment, and software
(115,625)
(104,190)
Acquisition of HEYDUDE, net of cash acquired
—
(2,046,881)
Other
(46)
(20)
Cash used in investing activities
(115,671)
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