Crocs, Inc.'s reported earnings climbed 13.1% in its third quarter, to $25.0 million, or 28 cents per share, from $22.1 million, or 25 cents, a year earlier. Revenue increased 30% to $215.6 million from recurring revenue of $165.7 million a year ago.
Recurring revenue is a non-GAAP measure that excludes impaired product sales of $11.5 million in the third quarter of 2009. On a GAAP basis, third quarter revenue increased 22% year-over-year.
Excluding a one-time tax benefit of $3.0 million, or 3 cents per diluted share, and other non-recurring charges, non-GAAP net income was $22.1 million or $0.25 per diluted share in the third quarter 2010. This compares to third quarter 2009 equivalent non-GAAP net income of $1.8 million, or $0.02 per diluted share.
Year-over-year third quarter changes in the company's channel revenue streams, as reported, were as follows:
* Wholesale sales increased 16% to $123.9 million;
* Retail sales increased 35% to $72.5 million;
* Internet sales increased 19% to $19.2 million.
Changes in the company's regional revenue streams, as reported, during the same quarterly periods were as follows:
* Americas increased 31% to $104 million;
* Asia increased 16% to $79 million;
* Europe increased 9% to $32.6 million.
Gross profit for the third quarter of 2010 increased 32% to $118.8 million, or 55.1% as a percentage of sales, from $89.9 million, or 50.7% of sales in same period last year. Selling, General, & Administrative expenses (including foreign exchange, restructuring, impairment, and charitable contributions) increased 13% to $91.4 million versus $80.9 million a year ago. As a percentage of sales, SG&A decreased to 42.4% from 45.7% in the third quarter of 2009.
Balance Sheet
The company's cash and cash equivalents as of September 30, 2010 increased 88% to $143.1 million compared to $76.0 million at September 30, 2009. The Company had no bank debt at September 30, 2010.
Inventory grew 25% to $142.5 million at September 30, 2010 from $113.7 million at September 30, 2009. The increase is a result of multiple factors including a 37% increase in backlog as of September 30, 2010, an increase of 44 retail locations over the third quarter 2009, strong new product sell through and the support of 21% higher anticipated fourth quarter revenue. For the quarter ended September 30, 2010, our inventory turnover was 3.0 on an annualized basis.
The company ended the third quarter of 2010 with accounts receivable of $81.3 million compared to $65.8 million at September 30, 2009.
John McCarvel, President and Chief Executive Officer, commented, “Our improved operating results continued to be driven by growing consumer demand for our expanded product assortment. After a strong summer selling season we began shipping significantly more of our back-to-school and fall products to our global network of wholesale accounts and distributors versus a year ago. We witnessed similar trends in our consumer direct channel where weekly sell-through rates of our new products exceeded internal projections. Our sales performance year-to-date has been very encouraging and helped fuel the 60% significant increase in our spring / summer 2011 backlog.”
Guidance
For the fourth quarter of 2010, the company expects revenue of approximately $165 million, a 21% increase over fourth quarter 2009. The company expects fourth quarter inventory to decrease approximately 10% from the third quarter 2010. The company expects diluted earnings per share for the fourth quarter 2010 to increase to approximately $0.02 per diluted share versus a diluted loss per share of ($0.13) for the fourth quarter 2009.
