Crocs Growth Accelerates in Second Quarter, But Will IPO Fly?…

Crocs updated their S-1 filing for an initial public offering to reflect the company’s sales and earnings for the first-half of fiscal 2005. Previously, the company had only shared the first quarter of the year, but it appears the Crocs products are selling-in at a very rapid, and accelerating, rate. The company recorded $25.8 million in sales during the second quarter, bringing first half sales up to $36.7 million. This compares to $2.0 million in sales during the second quarter last year and $3.0 million in sales for the first half.

In spite of the company’s difficulty in finding manufacturing capacity, it was able to boost margins during the quarter by 360 basis points to 54.2%. Crocs’ SG&A expenses are increasing, but when looked at as a percentage of sales, they are doing quite well, with the metric falling 1,530 basis points to 31.1% compared to 46.3% during the second quarter last year. This brought the company’s net income up to $3.7 million compared to $100,000 last year and diluted EPS up to $24.40 per share compared to $5.60 per share last year.

For the first half, margins jumped 1,130 basis points to 56.6% compared to 43.5% last year. SG&A dropped over 40 full percentage points to 32.9% of sales versus 73.5% for the first half last year. H1 net income was $6.1 million compared to a loss of $900,000 last year and diluted EPS was $40.40 versus a loss per share of $4.10 in 2004.

>>> Despite the Q2 growth, there’s still quite a bit of reservation that this will make it to the street. A valuation exceeding $600 million on this level of sales will be tough…