Crocs, Inc. (NASDAQ: CROX) today reported financial results for the quarter ended June 30, 2008.
Revenues for the quarter ended June 30, 2008 were $222.8 million compared to $224.3 million for the quarter ended June 30, 2007. For the quarter ended June 30, 2008 international sales rose approximately 20% to $130.1 million compared to $108.9 million for the same period a year ago, and domestic sales decreased 20% to $92.6 million versus $115.4 million for the quarter ended June 30, 2007. The Company reported net income of $2.1 million, or $0.03 per diluted share compared to net income of $48.5 million, or $0.58 per diluted share, for the quarter ended June 30, 2007. Reported diluted earnings per share of $0.03 for the quarter ended June 30, 2008 includes an aggregate $0.03 for charges related to the impairment of certain fixed assets equaling $2.9 million and a portion of the previously announced pre-tax charge associated with the shutdown of the Company’s Canadian manufacturing operations of approximately $1.4 million.
Gross profit for the second quarter of 2008 was $90.3 million, or 41% of revenues, compared to $131.9 million, or 59% of revenues, for the second quarter of 2007. Selling, general and administrative expenses for the quarter ended June 30, 2008 were $89.9 million, or 40% of revenues, compared to $63.5 million, or 28% of revenues, in the quarter ended June 30, 2007.
Ron Snyder, President and Chief Executive Officer of Crocs, Inc. commented: “The first half of 2008 was a challenging period for our Company as we dealt with a difficult macro-economic environment and lower than expected demand in certain markets. Despite our recent financial results, we continue to be confident about the strength of the Crocs brand and we remain optimistic about the future potential of this business. Over the near-term, we are focused on further reducing our expenses in order to exit this year with a leaner infrastructure while at the same time strategically increasing the retail presence and consumer awareness of our more recent product introductions. Longer-term, we are developing more comprehensive lines of footwear under specific category segments and implementing a more disciplined distribution strategy in order to reinvigorate our top-line. We are committed to improving our execution across the board and returning this company to growth and profitability.”
Balance Sheet
As of June 30, 2008, inventories decreased 17% to $220.2 million compared to $265.5 million as of March 31, 2008. In addition, the Company ended the second quarter with cash and cash equivalents of $51.2 million, an increase of $21.6 million compared to cash and cash equivalents of $29.6 million at the end of the first quarter in 2008. Additionally, the Company recognized impairment charges on certain fixed assets, primarily related to molds, in the amount of $2.9 million. These charges were recorded as the molds relate to styles that Crocs no longer intends to manufacture or styles for which the Company has more molds on hand than necessary to meet projected demand.
Guidance
For the year ending December 31, 2008, Crocs reiterated that it expects revenues to be down modestly compared to 2007 levels with diluted earnings per share of approximately break-even, including the total pre-tax charge of approximately $20.0 million, or $0.16 per diluted share, associated with the shutdown of the Company’s Canadian manufacturing operations. For the quarter ending September 30, 2008, the Company reiterates that it expects revenues to be in the range of $195.0 million to $205.0 million and diluted earnings per share of approximately $0.01 to $0.05.
Conference Call Information
A conference call to discuss second quarter fiscal 2008 financial results is scheduled for today (August 7, 2008) at 4:45 PM Eastern Time. A webcast of the call will take place simultaneously and can be accessed by clicking the ‘Investor Relations’ link under the Company section on www.crocs.com or at www.earnings.com. To listen to the broadcast, your computer must have Windows Media Player installed. If you do not have Windows Media Player, go to the latter site prior to the call, where you can download the software for free.
About Crocs, Inc:
Crocs, Inc. is a designer, manufacturer and retailer of footwear for men, women and children under the Crocs™ brand.
All Crocs™ brand shoes feature Crocs’ proprietary closed-cell resin, Croslite™, which represents a substantial innovation in footwear. The Croslite™ material enables us to produce soft, comfortable, lightweight, superior-gripping, non-marking and odor-resistant shoes. These unique elements make Crocs™ footwear ideal for casual wear, as well as for professional and recreational uses such as boating, hiking, hospitality and gardening. The versatile use of the material has enabled us to successfully market our products to a broad range of consumers.
In 2006, the company acquired Jibbitz LLC, a unique accessory brand with colorful snap-on products specifically suited for Crocs shoes. Today, more than 1,600 Jibbitz designs are available to consumers for personalizing and customizing their Crocs™ footwear.
Please visit www.crocs.com for additional information.
Forward Looking Statements
The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements related to our future prospects, inventory and strategic advances and our expectations regarding our growth, revenues, brand, expense reductions, distribution strategy, future sales and earnings, international expansion and product development. 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 limited operating history; our significant recent expansion; changing fashion trends; our reliance on market acceptance of the small number of products we sell; our ability to develop and sell new products; our limited manufacturing capacity and distribution channels; our reliance on third party manufacturing and logistics providers for the production and distribution of our products; our reliance on a single-source supply for certain raw materials; our management and information systems infrastructure; our ability to obtain and protect intellectual property rights; the effect of competition in our industry; the effects of seasonality on our sales; our ability to attract, assimilate and retain management talent; and other factors described in our 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. We do not undertake any obligation to update publicly any forward-looking statement, including, without limitation, any estimate regarding revenues or earnings, whether as a result of the receipt of new information, future events, or otherwise.
| Crocs, Inc. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Revenues | $ | 222,770 | $ | 224,273 | $ | 421,310 | $ | 366,275 | ||||||||
| Cost of sales | 132,482 | 92,329 | 245,788 | 149,845 | ||||||||||||
| Gross profit | 90,288 | 131,944 | 175,522 | 216,430 | ||||||||||||
| Selling, general and administrative expenses | 89,857 | 63,472 | 166,833 | 110,799 | ||||||||||||
| Restructuring Charges | 470 | - | 4,319 | - | ||||||||||||
| Impairment Charges | 2,903 | - | 13,716 | - | ||||||||||||
| Income (loss) from operations | (2,942 | ) | 68,472 | (9,346 | ) | 105,631 | ||||||||||
| Interest expense | 598 | 51 | 971 | 115 | ||||||||||||
| Other expense (income), net | 314 | (399 | ) | (47 | ) | (915 | ) | |||||||||
| Income (loss) before income taxes | (3,854 | ) | 68,820 | (10,270 | ) | 106,431 | ||||||||||
| Income tax expense (benefit) | (5,986 | ) | 20,369 | (7,875 | ) | 33,035 | ||||||||||
| Net income (loss) | 2,132 | 48,451 | (2,395 | ) | 73,396 | |||||||||||
| Net income (loss) per share: | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.60 | $ | (0.03 | ) | $ | 0.92 | |||||||
| Diluted | $ | 0.03 | $ | 0.58 | $ | (0.03 | ) | $ | 0.88 | |||||||
| Weighted average common shares: | ||||||||||||||||
| Basic | 82,718,731 | 80,253,555 | 82,603,666 | 79,761,491 | ||||||||||||
| Diluted | 83,740,782 | 83,686,108 | 82,603,666 | 83,066,178 | ||||||||||||
| Crocs, Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands, except share and per share data) | ||||||||
| (unaudited) | ||||||||
| June 30, | December 31, | |||||||
| 2008 | 2007 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 51,230 | $ | 36,335 | ||||
| Restricted cash | 3,930 | 300 | ||||||
| Accounts receivable, net | 128,110 | 152,919 | ||||||
| Inventories, net | 220,174 | 248,391 | ||||||
| Deferred tax assets, net | 13,695 | 12,140 | ||||||
| Income tax receivable | 5,985 | - | ||||||
| Prepaid expenses and other current assets | 20,792 | 17,865 | ||||||
| Assets held for sale | 1,051 | - | ||||||
| Total current assets | 444,967 | 467,950 | ||||||
| Property and equipment, net | 96,862 | 88,184 | ||||||
| Restricted cash | 1,120 | 1,014 | ||||||
| Goodwill | 23,050 | 23,759 | ||||||
| Other intangibles, net | 40,017 | 31,634 | ||||||
| Deferred tax assets, net | 22,002 | 8,051 | ||||||
| Other assets | 11,359 | 6,833 | ||||||
| Total assets | $ | 639,377 | $ | 627,425 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 45,743 | $ | 82,979 | ||||
| Accrued expenses and other liabilities | 55,373 | 57,246 | ||||||
| Accrued Restructuring Charges | 867 | - | ||||||
| Deferred tax liabilities, net | 661 | 265 | ||||||
| Income taxes payable | 10,643 | 19,851 | ||||||
| Notes payable and current installments of long-term debt | 36,963 | 7,107 | ||||||
| Total current liabilities | 150,250 | 167,448 | ||||||
| Long-term debt | - | 9 | ||||||
| Deferred tax liabilities, net | 6,198 | 1,858 | ||||||
| Other liabilities | 23,131 | 13,997 | ||||||
| Total liabilities | $ | 179,579 | $ | 183,312 | ||||
| Stockholders' equity: | ||||||||
Common shares, par value $0.001 per share; 250,000,000 authorized, 83,332,493 and 82,808,493 shares issued and outstanding in 2008 and 82,722,426 and 82,198,426 issued and outstanding in 2007 | 83 | 83 | ||||||
| Treasury Stock, 524,000 shares, at cost | (25,022 | ) | (25,022 | ) | ||||
| Additional paid-in-capital | 227,056 | 211,936 | ||||||
| Deferred compensation | (1,130 | ) | (2,402 | ) | ||||
| Retained earnings | 246,914 | 249,309 | ||||||
| Accumulated other comprehensive income | 11,897 | 10,209 | ||||||
| Total stockholders' equity | 459,798 | 444,113 | ||||||
| Total liabilities and stockholders' equity | $ | 639,377 | $ | 627,425 | ||||
Contacts:
Russell Hammer/Chief Financial Officer
Tia
Mattson/Public Relations Manager
303-848-7000
or
Investors:
Integrated
Corporate Relations, Inc.
Chad Jacobs / Brendon Frey, 203-682-8200
