Crocs, Inc. reported revenues for the third quarter ended Sept. 30 increased 1.7% to $177.1 million compared to revenues of $174.2 million in the year ago period, ahead of the company’s guidance for revenues between $150 and $160 million. The company’s third quarter 2009 revenue included $11.5 million in planned sales of previously impaired footwear.
The company reported net income of $22.1 million in the third quarter of 2009 with diluted earnings per share of 25 cents compared to a third quarter 2008 net loss of $148.0 million, or ($1.79) per diluted share. Third quarter 2009 net income includes the effects of the following:
These positive effects on net income were partially offset by the unfavorable impacts of $3.6 million in impairment and restructuring charges and net charitable donations.
On a non-GAAP basis, the Company’s third quarter 2009 net income after taxes and excluding certain other one-time items was $0.6 million, or $0.01 per diluted share.
Year-over-year third quarter changes in the Company’s channel revenue streams were as follows:
Retail sales increased 39.6% to $53.9 million;
Internet sales increased 61.0% to $16.1 million; and
Wholesale sales decreased 14.7% to $107.1 million.
Changes in the company’s regional revenue streams during the same periods were as follows:
Asia increased 7.4% to $68.0 million;
Europe increased 1.7% to $29.9 million; and
Americas decreased 2.8% to $79.3 million.
Balance Sheet
The company’s cash and cash equivalents as of Sept. 30 increased nearly 50% since Dec. 31 to $76.0 million, despite fully repaying previously-outstanding debt of $17.3 million during the quarter. During the quarter, the company also secured a new asset-backed credit facility with up to $30.0 million in borrowings available, which is intended to provide additional liquidity and flexibility in the future.
Inventory of $113.7 million at Sept. 30 was 20.6% lower than at Dec. 31, resulting in a trailing twelve month inventory turnover of 3 times.
The company ended the third quarter of 2009 with accounts receivable of $65.8 million compared to $35.3 million at December 31, 2008 as a result of higher sales in the quarter. Days sales outstanding decreased from 37.5 days for the three months ended September 30, 2008 to 34.2 days for the three months ended September 30, 2009.
Net capital expenditures in the third quarter of 2009 were $6.1 million compared to $18.3 million the third quarter of 2008.
“Our third quarter results were driven by the continuing strength of our consumer-direct businesses and the favorable effects of our cost reduction programs,” said John Duerden, President and Chief Executive Officer. “While we are encouraged by our top-line growth and return to profitability in the quarter, the normal seasonality of our business will make it difficult to maintain profitability in the fourth quarter. However, future wholesale bookings for the spring 2010 line are strong in all regions. When coupled with the launch of our new, targeted marketing programs, this provides us with increased confidence that we will return to profitability during 2010. In the meantime, we will continue to invest in the products, systems, processes and customer relationships necessary to deliver the best long-term results.”
Guidance
The company expects to generate between $110 million and $115 million in revenue during its fiscal fourth quarter, with a loss per diluted share between ($0.20) and ($0.15). This guidance excludes the effect of fluctuations in foreign currency, charitable contributions and one-time and non-recurring charges. Guidance includes the effect of impaired inventory sales and will on a go-forward basis.
