Crocs, Inc. Reports Fiscal 2006 Second Quarter Financial Results.NIWOT, Colo. -- Crocs Crocs Inc. (NASDAQ: CROX) is an American company founded by Lyndon "Duke" Hanson, Scott Seamans, and George Boedecker[1] in July 2002. Based in Boulder, Colorado, the firm was created to market a lightweight plastic shoe first developed and manufactured by Foam , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CROX): --Second Quarter Revenues More than Triple to $85.6 Million vs. $25.8 Million Last Year --Company Reports 2Q06 Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Including Share-based Compensation of $0.39 vs. $0.10 Last Year --Company Issues Third Quarter 2006 Guidance Crocs, Inc. (NASDAQ: CROX) today reported its results of operations for the second quarter ended June June: see month. 30, 2006. Revenues for the second quarter ended June 30, 2006 increased 231.8% to $85.6 million compared to revenues of $25.8 million for the second quarter ended June 30, 2005. Revenue for the six months ended June 30, 2006 increased 255.6% to $130.5 million compared to revenues of $36.7 million for the six months ended June 30, 2005. Net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stockholders for the second quarter of fiscal 2006 was $15.7 million, or $0.39 per diluted share, compared to net income attributable to common stockholders of $3.3 million, or $0.10 per diluted share, for the second quarter of fiscal 2005. Second quarter net income attributable to common stockholders includes non-cash share-based compensation expense, net of tax effect, of $1.5 million compared to $685,000 for the comparable period of 2005. Excluding the non-cash share-based compensation expense, non-GAAP net income was $17.2 million and non-GAAP net income per diluted common share was $0.43 for the second quarter ended June 30, 2006. Net income attributable to common stockholders for the six months ended June 30, 2006 was $22.1 million, or $0.56 per diluted share, compared to net income attributable to common stockholders of $5.3 million, or $0.16 per diluted share, for the six months ended June 30, 2005.
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
(In thousands, except
per share data) 2006 2005 2006 2005
--------- -------- --------- --------
Revenues $85,635 $25,769 $130,477 $36,727
GAAP net income attributable to
common stockholders $15,666 $3,282 $22,074 $5,254
Non-GAAP net income, excluding
share-based compensation, net of
tax effect $17,198 $3,967 $24,636 $7,415
GAAP net income per diluted
common share $0.39 $0.10 $0.56 $0.16
Non-GAAP net income per diluted
common share, excluding share-
based compensation $0.43 $0.12 $0.63 $0.22
Ron Noun 1. Ron - a Chadic language spoken in northern Nigeria Bokkos, Daffo West Chadic - a group of Chadic languages spoken in northern Nigeria; Hausa in the most important member Snyder Snyder, city (1990 pop. 12,195), seat of Scurry co., NW Tex., in a prairie and mesquite region; inc. 1907. Oil production is the city's main industry; natural gas is also refined and processed. , President and Chief Executive Officer of Crocs, Inc., commented "Our second quarter results were much stronger than we anticipated due to increased demand for our footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). both domestically and overseas. Importantly, sales were driven by robust demand for our core product, as well as positive consumer reaction to our new styles, such as Athens Athens, city, Greece Athens (ăth`ĭnz), Gr. Athínai, city (1991 pop. 2,907,179; 1991 urban agglomeration pop. 3,072,922), capital of Greece, E central Greece, on the plain of Attica, between the Kifisós and , Off-Road off-road adj. Existing, taking place, or designed for use off paved or public roads or in rugged terrain: off-road sports such as snowmobiling. and Scutes. At the same time, we drove improvements in operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. , which allowed us to generate a significant improvement in our bottom line." Gross profit for the three months ended June 30, 2006 was $47.0 million, or 54.8% of revenues, compared to gross profit of $14.0 million, or 54.2% of revenues for the three months ended June 30, 2005. Gross profit for the six months ended June 30, 2006 was $70.6 million, or 54.1% of revenues, compared to gross profit of $20.8 million, or 56.7% of revenues for the six months ended June 30, 2005. Selling, general and administrative expenses for the three months ended June 30, 2006 was $23.3 million, or 27.2% of revenues, compared to $8.6 million, or 33.2% of revenues in the corresponding period a year ago. Selling, general and administrative expenses for the six months ended June 30, 2006 was $37.0 million, or 28.4% of revenues, compared to $13.2 million, or 35.6% of revenues in the corresponding period a year ago. For the third quarter ending September September: see month. 30, 2006, the Company currently anticipates total revenues to be in the range of $87.0 to $90.0 million and projects its net income per diluted share to range from $0.38 to $0.40, including share-based compensation expense. Mr. Snyder concluded, "The first six months of 2006 have been marked by a number of important accomplishments for Crocs. Financially, we reported significant improvements in revenues, net income, and income per diluted share, as well as completed a very successful initial public offering. Operationally, we made strategic investments in our infrastructure, particularly in the areas of manufacturing, shipping and warehousing in order to better serve our retail partners and to fully capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growing demand for our products. Strategically, we have further diversified diversified (di·verˑ·s our business with the introduction of new products and the addition of new channels of distribution. We are very pleased with the progress we have made across the board and we look forward to building on our positive momentum going forward." Non-GAAP Disclosures This press release includes certain non-GAAP financial measures with respect to net income and diluted earnings per common share, excluding the impact of share-based compensation expense. The Company's management uses these measures to monitor and evaluate operating results and trends and to gain an understanding of the comparative operating performance of the Company. The Company believes these measures enable investors to assess the Company's performance on the same basis applied by management and to ease comparisons of the Company's operating performance from period to period and among other companies that separately identify share-based compensation expenses. Conference Call Information A conference call to discuss second quarter fiscal 2006 financial results is scheduled for today (Thursday Thursday: see week. , August 3) at 4:30 PM Eastern Time. A webcast of the call will take place simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics and can be accessed by clicking the 'Investor Relations' link under the Company section on www.crocs.com and at www.viavid.net. To listen to the broadcast, your computer must have Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. installed. If you do not have Windows Media Player, go to the latter site prior to the call, where you can download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. the software for free. About Crocs, Inc. Crocs, Inc. is a rapidly growing designer, manufacturer and marketer of footwear for men, women and children under the crocs brand. All of our footwear products incorporate our proprietary closed-cell resin resin, any of a class of amorphous solids or semisolids. Resins are found in nature and are chiefly of vegetable origin. They are typically light yellow to dark brown in color; tasteless; odorless or faintly aromatic; translucent or transparent; brittle, fracturing material, which we believe represents a substantial innovation in footwear comfort and functionality. Our proprietary closed-cell resin, which we refer to as croslite(TM) enables us to produce a soft and lightweight Use in English The word lightweight is conserderd one of the most insulting words in the English language. Is is the only word in the English language is every part of speech at the same time. One lightweight of note is Jason. , non-marking, slip- and odor-resistant shoe. These unique properties make crocs footwear ideal for casual wear, as well as for recreational uses such as boating, hiking hiking Walking, often among hills or mountains, as recreational sport. It represents an activity in its own right and also figures in backpacking, camping, hunting, mountaineering, and orienteering. , fishing and gardening, and have enabled us to successfully market our products to a broad range of consumers. Forward Looking Statements The matters regarding the future discussed in this news release include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements related to our expectations regarding our total revenues and net income per diluted share for the third quarter ending September 30, 2006. 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. 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 potential effects of seasonality on our sales; our ability to attract, assimilate as·sim·i·late v. 1. To consume and incorporate nutrients into the body after digestion. 2. To transform food into living tissue by the process of anabolism. and retain management talent; and other factors described in our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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,
2006 2005 2006 2005(1)
Revenues $ 85,635 $ 25,769 $ 130,477 $ 36,727
Cost of Sales 38,665 11,800 59,828 15,919
Gross Profit 46,970 13,969 70,649 20,808
Selling, general
and administrative
expenses 23,312 8,552 36,978 13,225
Income from
operations 23,658 5,417 33,671 7,583
Interest expense 92 165 391 202
Other expense
(income), net: (366) 6 (662) 23
Income before
income taxes 23,932 5,246 33,942 7,358
Income tax expense 8,266 1,896 11,835 1,968
Net income 15,666 3,350 22,107 5,390
Dividends on
redeemable
convertible
preferred shares 0 68 33 136
Net income
attributable to
common
stockholders 15,666 3,282 22,074 5,254
Net income per
share:
Basic $ 0.41 $ 0.13 $ 0.62 $ 0.16
Diluted $ 0.39 $ 0.10 $ 0.56 $ 0.16
Weighted average
common shares:
Basic 38,286,877 25,217,641 35,608,875 25,197,004
Diluted 40,427,703 33,497,743 39,351,248 33,289,163
(1) Our Statement of Operations for the six month period ended June
30, 2005 has been restated to reflect the effect of adjustments to
our share-based compensation. See the notes to our Form 10-Q
filing for the quarter ended June 30, 2006 for further
information, which will be filed by August 14, 2006.
Crocs, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share data)
(unaudited)
June 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $ 67,017 $ 4,787
Accounts receivable, net 47,252 17,641
Inventories, net 40,839 28,494
Deferred tax assets 1,636 1,939
Prepaid expenses and other current assets 3,345 3,492
Total current assets 160,089 56,353
Property and equipment, net 19,924 14,765
Goodwill 351 336
Other intangibles, net 7,523 5,311
Deferred tax assets, net 1,532 1,084
Other assets 777 183
Total assets $190,196 $ 78,032
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 15,466 $ 20,829
Accrued liabilities and other
liabilities 16,101 8,178
Income taxes payable 5,214 8,697
Notes payable and current
installments of long-term debt 864 8,601
Total current liabilities 37,645 46,305
Long-term debt 1,742 3,422
Deferred tax liability 1,884 1,772
Other liabilities 286 319
Total liabilities 41,557 51,818
Commitments and contingencies
Redeemable common shares, 8,410,320
shares issued and outstanding at
December 31, 2005 - 1,800
Redeemable convertible preferred
shares, par value $0.001 per share;
8,000,000 shares authorized 7,452,492
shares issued and outstanding in 2005 -
preferences in liquidation of $5,500 - 5,500
Stockholders' equity:
Common shares, par value $0.001 per
share; 125,000,000 and 25,000,000 shares
authorized, 38,411,687 and 17,449,699
shares issued and outstanding 38 17
Additional paid-in-capital 117,202 13,976
Deferred compensation (8,186) (12,364)
Retained earnings 38,772 16,697
Accumulated other comprehensive income 813 588
Total stockholders' equity 148,639 18,914
Total liabilities and stockholders'
equity $190,196 $ 78,032
Crocs, Inc.
Reconciliation of Non-GAAP
Financial Results
(In thousands, except share and per share data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30,
2006 2005 2006 2005(1)
GAAP Net income
attributable to common
stockholders $15,666 $ 3,282 $ 22,074 $ 5,254
Plus:
Share-based compensation,
net of tax 1,532 685 2,562 2,161
--------- ---------- -------- ---------
Non-GAAP net income 17,198 3,967 24,636 7,415
--------- ---------- -------- ---------
Non-GAAP net income
per share:
Diluted $ 0.43 $ 0.12 $ 0.63 $ 0.22
Weighted average common
shares:
Diluted 40,427,703 33,497,743 39,351,248 33,289,163
(1) Our Statement of Operations for the six month period ended
June 30, 2005 has been restated to reflect the effect of
adjustments to our share-based compensation. See the notes to our
Form 10-Q filing for the quarter ended June 30, 2006 for further
information, which will be filed by August 14, 2006.
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