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Crocs Raises Outlook On Strong First Quarter Results

27 Apr Crocs Raises Outlook On Strong First Quarter Results

Posted at 16:04h in FDRA, Home, Latest News by

Crocs, Inc. reported earnings doubled in the first quarter ended March 31 on a 34 percent revenue gain. Sales gains were boosted by last year’s acquisition of Hey Dude and a 19.0 gain for the Crocs brand. Full-year guidance was raised due to accelerated momentum with the Crocs brand.

Sales of $884.2 topped company guidance in the range of $838 million to $858 million and Wall Street’s consensus estimate of $856 million. Adjusted operating margin was 27.9 percent topped guidance in the range of 24 percent to 25 percent. Adjusted EPS of $2.61 exceeded guidance between $2.06 and $2.19 and Wall Street’s consensus target of $2.15.

“Our exceptional first quarter results are a testament to the strength of our brands. The Crocs brand grew 19.0 percent as we see a strong consumer response to our new clog and sandal introductions. The Hey Dude brand is gaining momentum and experienced outstanding DTC growth,” said Andrew Rees, CEO. “We are raising our 2023 revenue growth outlook to now be 11 percent to 14 percent, resulting in revenues of approximately $4.0 billion, reflecting our confidence in our ability to continue to gain market share, deliver best-in-class profitability, and generate strong cash flow.”

First  Quarter 2023 Highlights

  • Consolidated revenues of $884.2 million increased 33.9 percent, or 36.2 percent on a constant currency basis, as compared to 2022.
  • Crocs Brand revenues of $648.8 million increased 19.0 percent, or 21.6 percent on a constant currency basis, as compared to 2022.
  • Crocs Brand international revenues grew 31.8 percent, or 37.7 percent on a constant currency basis, and North America DTC comparable sales rose 12.1 percent, as compared to 2022.
  • Hey Dude Brand revenues were $235.4 million, up 104.8 percent compared to the partial period beginning on February 17, 2022, the date of acquisition, through March 31, 2022.
  • Operating margin was 26.6 percent and the adjusted operating margin was 27.9 percent.
  • Diluted earnings per share of $2.39 increased 100.8 percent as compared to the same period last year. Adjusted diluted earnings per share increased 27.3 percent to $2.61.

First  Quarter 2023 Operating Results

  • Revenues were $884.2 million, an increase of 33.9 percent from the same period last year, or 36.2 percent on a constant currency basis. Direct-to-consumer (DTC), which includes retail and e-commerce, revenues grew 33.5 percent, or 35.1 percent on a constant currency basis. Wholesale revenues grew 34.2 percent compared to 2022, or 36.9 percent on a constant currency basis.
  • Gross margin was 53.9 percent compared to 49.2 percent, and adjusted gross margin was 54.2 percent compared to 53.9 percent in the same period last year, respectively.
  • Selling, general, and administrative expenses (SG&A) of $241.4 million increased from $206.2 million in the same period last year, and SG&A as a percent of revenues improved to 27.3 percent from 31.2 percent in the prior year. Adjusted SG&A improved to 26.3 percent of revenues versus 27.3 percent for the same period last year. Adjusted SG&A excludes $8.8 million of costs, primarily related to discontinued technology projects and final Hey Dude integration expenses.
  • Income from operations increased 98.0 percent to $234.9 million and the operating margin was 26.6 percent, compared to 18.0 percent for the same period last year, due to higher gross margin and significantly less Heydude acquisition expenses. Adjusted income from operations rose 40.8 percent to $247.0 million and adjusted operating margin was 27.9 percent.
  • Diluted earnings per share was $2.39, as compared to $1.19 for the same period last year. Adjusted diluted earnings per share increased 27.3 percent to $2.61 compared to 2022.

First  Quarter 2023 Brand Summary

  • Crocs Brand revenues increased 19.0 percent, or 21.6 percent on a constant currency basis, to $648.8 million. Wholesale revenues increased 19.3 percent, or 22.4 percent on a constant currency basis. DTC comparable sales increased 19.2 percent.
    • North America revenues of $351.3 million increased 10.0 percent, or 10.3 percent on a constant currency basis.
    • Asia Pacific revenues of $140.0 million increased 46.1 percent, or 54.8 percent on a constant-currency basis.
    • Europe, Middle East, Africa, and Latin America (EMEALA) revenues of $157.5 million increased 21.2 percent, or 25.1 percent on a constant-currency basis.
  • Hey Dude Brand revenues during the first quarter were $235.4 million. Wholesale revenues were $167.9 million and DTC revenues were $67.5 million.

 Balance Sheet and Cash Flow

  • Cash and cash equivalents were $125.7 million as of March 31, 2023, compared to $191.6 million as of December 31, 2022.
  • Inventories increased to $476.1 million as of March 31, 2023, compared to $471.6 million as of December 31, 2022 and $407.6 million as of March 31, 2022.
  • Capital expenditures during the three months ended March 31, 2023, were $27.6 million, compared to $39.8 million for the same period last year, reflecting continued investments in our distribution centers.
  • Borrowings were $2,283.3 million as of March 31, 2023, compared to $2,322.4 million as of December 31, 2022, as we repaid $41.4 million of debt. The company’s liquidity position remained strong with $125.7 million in cash and cash equivalents and $550.7 million in available borrowing capacity as of March 31, 2023.

Financial Outlook

Second  Quarter 2023

  • Revenues to grow approximately 6 percent to 9 percent compared to the second quarter 2022, resulting in revenues of approximately $1,026 million to $1,049 million at current currency rates;
  • Adjusted operating margin of approximately 26.0 percent; and
  • Adjusted diluted earnings per share of $2.83 to $2.98.

Full Year 2023

  • Consolidated revenue growth to now be 11 percent to 14 percent compared to 2022, resulting in revenues of approximately $3,945 million to $4,045 million at current currency rates.
    • Revenues for the Crocs Brand to now grow 7 percent to 9 percent on a reported basis.
    • Revenues for the Heydude Brand to grow mid-20 percent on a reported basis.
  • Adjusted operating margin to now be between 26.0 percent to 27.0 percent.
  • Non-GAAP adjustments of approximately $30 million to be primarily related to investments in our distribution centers to support growth and to be fairly balanced across COGS and SG&A.
  • Combined GAAP tax rate to now be approximately 23 percent and the Non-GAAP effective tax rate of approximately 20 percent.
  • Adjusted diluted earnings per share to now be between $11.17 and $11.73. Adjusted diluted earnings per share guidance does not assume any impact from potential future share repurchases.
  • Capital expenditures to be approximately $165 to $180 million, primarily related to the expansion of our distribution capabilities including our new Heydude distribution center in Las Vegas opening later this year, implementation of new technology systems for Hey Dude and expansion of our corporate facilities to support growth.

The company’s previous guidance called for revenue growth in 2023 of 10 percent to 13 percent compared to 2022, resulting in full-year revenues of approximately $3.9 billion to $4.0 billion at current currency rates. Revenues for the Crocs Brand were projected to grow 6 percent to 8 percent and 9 percent to 11 percent in constant-currency. Revenues for the Hey Dude Brand were expected to grow mid-20 percent on a reported basis. Adjusted operating margin had been projected to be approximately 26.0 percent. Adjusted diluted earnings per share was expected in the range of $11.00 to $11.31.