Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-51754 | |
Entity Registrant Name | CROCS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-2164234 | |
Entity Address, Address Line One | 13601 Via Varra | |
Entity Address, City or Town | Broomfield | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80020 | |
City Area Code | 303 | |
Local Phone Number | 848-7000 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | CROX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,566,623 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Entity Central Index Key | 0001334036 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,045,717 | $ 985,094 | $ 3,002,250 | $ 2,609,823 |
Cost of sales | 464,081 | 443,792 | 1,322,937 | 1,245,864 |
Gross profit | 581,636 | 541,302 | 1,679,313 | 1,363,959 |
Selling, general and administrative expenses | 307,784 | 277,239 | 852,044 | 733,255 |
Income from operations | 273,852 | 264,063 | 827,269 | 630,704 |
Foreign currency losses, net | (1,770) | (393) | (1,622) | (1,115) |
Interest income | 506 | 31 | 1,225 | 219 |
Interest expense | (39,207) | (34,142) | (124,907) | (86,357) |
Other income (expense), net | 24 | 16 | 448 | (512) |
Income before income taxes | 233,405 | 229,575 | 702,413 | 542,939 |
Income tax expense | 56,380 | 60,226 | 163,433 | 140,515 |
Net income | $ 177,025 | $ 169,349 | $ 538,980 | $ 402,424 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 2.90 | $ 2.75 | $ 8.74 | $ 6.59 |
Diluted (in dollars per share) | $ 2.87 | $ 2.72 | $ 8.65 | $ 6.51 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 61,143 | 61,693 | 61,670 | 61,042 |
Diluted (in shares) | 61,615 | 62,367 | 62,280 | 61,840 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 177,025 | $ 169,349 | $ 538,980 | $ 402,424 |
Derivatives designated as hedging instruments: | ||||
Unrealized gains (losses) on derivative instruments | (363) | 568 | (519) | 568 |
Reclassification adjustment for realized (gains) losses on derivative instruments | 247 | 0 | 847 | 0 |
Net increase (decrease) from derivatives designated as hedging instruments | (116) | 568 | 328 | 568 |
Foreign currency translation losses, net | (17,564) | (34,285) | (12,421) | (70,788) |
Total comprehensive income, net of tax | $ 159,345 | $ 135,632 | $ 526,887 | $ 332,204 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 127,320 | $ 191,629 |
Restricted cash - current | 2 | 2 |
Accounts receivable, net of allowances of $27,305 and $24,493, respectively | 391,207 | 295,594 |
Inventories | 390,163 | 471,551 |
Income taxes receivable | 3,047 | 14,752 |
Other receivables | 23,419 | 18,842 |
Prepaid expenses and other assets | 44,024 | 33,605 |
Total current assets | 979,182 | 1,025,975 |
Property and equipment, net | 223,061 | 181,529 |
Intangible assets, net of accumulated amortization of $142,661 and $125,014, respectively | 1,793,704 | 1,800,167 |
Goodwill | 711,885 | 714,814 |
Deferred tax assets, net | 527,678 | 528,278 |
Restricted cash | 3,707 | 3,254 |
Right-of-use assets | 313,608 | 239,905 |
Other assets | 28,539 | 7,875 |
Total assets | 4,581,364 | 4,501,797 |
Current liabilities: | ||
Accounts payable | 209,890 | 230,821 |
Accrued expenses and other liabilities | 248,160 | 239,424 |
Income taxes payable | 108,716 | 89,211 |
Current borrowings | 20,000 | 24,362 |
Current operating lease liabilities | 61,111 | 57,456 |
Total current liabilities | 647,877 | 641,274 |
Deferred tax liabilities, net | 299,296 | 302,030 |
Long-term income taxes payable | 226,006 | 224,837 |
Long-term borrowings | 1,918,668 | 2,298,027 |
Long-term operating lease liabilities | 286,910 | 215,119 |
Other liabilities | 2,349 | 2,579 |
Total liabilities | 3,381,106 | 3,683,866 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, par value $0.001 per share, 250.0 million shares authorized, 110.0 million and 109.5 million issued, 60.8 million and 61.7 million outstanding, respectively | 110 | 110 |
Treasury stock, at cost, 49.3 million and 47.7 million shares, respectively | (1,863,567) | (1,695,501) |
Additional paid-in capital | 821,120 | 797,614 |
Retained earnings | 2,358,179 | 1,819,199 |
Accumulated other comprehensive loss | (115,584) | (103,491) |
Total stockholders’ equity | 1,200,258 | 817,931 |
Total liabilities and stockholders’ equity | $ 4,581,364 | $ 4,501,797 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance | $ 27,305 | $ 24,493 |
Intangible assets, net of accumulated amortization | $ 142,661 | $ 125,014 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock issued (in shares) | 110,000,000 | 109,500,000 |
Common stock outstanding (in shares) | 60,800,000 | 61,700,000 |
Treasury stock (in shares) | 49,300,000 | 47,700,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2021 | 58,330,000 | |||||
Beginning balance at Dec. 31, 2021 | $ 14,082 | $ 106 | $ (1,684,262) | $ 496,036 | $ 1,279,040 | $ (76,838) |
Beginning balance (in shares) at Dec. 31, 2021 | 47,583,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 25,463 | 25,463 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes (in shares) | 563,000 | 146,000 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes | (11,343) | $ (11,201) | (142) | |||
Repurchases of common stock, including excise tax (in shares) | 0 | |||||
Share issuance at Acquisition (in shares) | 2,852,000 | |||||
Share issuance at Acquisition | 270,396 | $ 3 | 270,393 | |||
Net income | 402,424 | 402,424 | ||||
Other comprehensive loss | (70,220) | (70,220) | ||||
Ending balance (in shares) at Sep. 30, 2022 | 61,745,000 | |||||
Ending balance at Sep. 30, 2022 | 630,802 | $ 109 | $ (1,695,463) | 791,750 | 1,681,464 | (147,058) |
Ending balance (in shares) at Sep. 30, 2022 | 47,729,000 | |||||
Beginning balance (in shares) at Jun. 30, 2022 | 61,627,000 | |||||
Beginning balance at Jun. 30, 2022 | 491,965 | $ 109 | $ (1,690,780) | 783,862 | 1,512,115 | (113,341) |
Beginning balance (in shares) at Jun. 30, 2022 | 47,667,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 7,888 | 7,888 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes (in shares) | 118,000 | 62,000 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes | (4,683) | $ (4,683) | ||||
Repurchases of common stock, including excise tax (in shares) | 0 | |||||
Net income | 169,349 | 169,349 | ||||
Other comprehensive loss | (33,717) | (33,717) | ||||
Ending balance (in shares) at Sep. 30, 2022 | 61,745,000 | |||||
Ending balance at Sep. 30, 2022 | $ 630,802 | $ 109 | $ (1,695,463) | 791,750 | 1,681,464 | (147,058) |
Ending balance (in shares) at Sep. 30, 2022 | 47,729,000 | |||||
Beginning balance (in shares) at Dec. 31, 2022 | 61,700,000 | 61,749,000 | ||||
Beginning balance at Dec. 31, 2022 | $ 817,931 | $ 110 | $ (1,695,501) | 797,614 | 1,819,199 | (103,491) |
Beginning balance (in shares) at Dec. 31, 2022 | 47,700,000 | 47,730,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | $ 23,507 | 23,507 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes (in shares) | 420,000 | 147,000 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes | (17,034) | $ (17,033) | (1) | |||
Repurchases of common stock, including excise tax (in shares) | (1,391,000) | 1,391,000 | ||||
Repurchases of common stock, including excise tax | (151,033) | $ (150,000) | $ (151,033) | |||
Net income | 538,980 | 538,980 | ||||
Other comprehensive loss | $ (12,093) | (12,093) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 60,800,000 | 60,778,000 | ||||
Ending balance at Sep. 30, 2023 | $ 1,200,258 | $ 110 | $ (1,863,567) | 821,120 | 2,358,179 | (115,584) |
Ending balance (in shares) at Sep. 30, 2023 | 49,300,000 | 49,268,000 | ||||
Beginning balance (in shares) at Jun. 30, 2023 | 62,067,000 | |||||
Beginning balance at Jun. 30, 2023 | $ 1,189,690 | $ 110 | $ (1,707,136) | 813,466 | 2,181,154 | (97,904) |
Beginning balance (in shares) at Jun. 30, 2023 | 47,825,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Share-based compensation | 7,655 | 7,655 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes (in shares) | 102,000 | 52,000 | ||||
Exercises of stock options, issuance of restricted stock awards, and vests of restricted stock units, net of shares withheld for taxes | (5,399) | $ (5,398) | (1) | |||
Repurchases of common stock, including excise tax (in shares) | (1,391,000) | 1,391,000 | ||||
Repurchases of common stock, including excise tax | (151,033) | $ (150,000) | $ (151,033) | |||
Net income | 177,025 | 177,025 | ||||
Other comprehensive loss | $ (17,680) | (17,680) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 60,800,000 | 60,778,000 | ||||
Ending balance at Sep. 30, 2023 | $ 1,200,258 | $ 110 | $ (1,863,567) | $ 821,120 | $ 2,358,179 | $ (115,584) |
Ending balance (in shares) at Sep. 30, 2023 | 49,300,000 | 49,268,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 538,980 | $ 402,424 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 40,531 | 26,498 |
Operating lease cost | 56,880 | 47,945 |
Share-based compensation | 23,507 | 25,463 |
Other non-cash items | 7,411 | 12,568 |
Changes in operating assets and liabilities, net of acquired assets and assumed liabilities: | ||
Accounts receivable | (99,912) | (166,864) |
Inventories | 77,915 | (139,682) |
Prepaid expenses and other assets | (30,714) | (20,526) |
Accounts payable, accrued expenses and other liabilities | (4,935) | 51,608 |
Right-of-use assets and operating lease liabilities | (54,287) | (45,824) |
Income taxes | 25,350 | 53,075 |
Cash provided by operating activities | 580,726 | 246,685 |
Cash flows from investing activities: | ||
Purchases of property, equipment, and software | (86,378) | (89,588) |
Acquisition of HEYDUDE, net of cash acquired | 0 | (2,046,881) |
Other | (90) | (20) |
Cash used in investing activities | (86,468) | (2,136,489) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 214,634 | 2,240,677 |
Repayments of borrowings | (603,703) | (350,285) |
Deferred debt issuance costs | (1,736) | (51,395) |
Repurchases of common stock | (150,013) | 0 |
Repurchases of common stock for tax withholding | (17,034) | (11,439) |
Other | 0 | 95 |
Cash provided by (used in) financing activities | (557,852) | 1,827,653 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (262) | (8,821) |
Net change in cash, cash equivalents, and restricted cash | (63,856) | (70,972) |
Cash, cash equivalents, and restricted cash—beginning of period | 194,885 | 216,925 |
Cash, cash equivalents, and restricted cash—end of period | $ 131,029 | $ 145,953 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Unless otherwise noted in this report, any description of the “Company,” “we,” “us,” or “our” includes Crocs, Inc. and our consolidated subsidiaries within our reportable operating segments and corporate operations. We are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. We strive to be the global leader in the sale of casual footwear characterized by functionality, comfort, color, and lightweight design. Our reportable operating segments include: (i) North America for the Crocs Brand, operating throughout the United States and Canada; (ii) Asia Pacific for the Crocs Brand, operating throughout Asia, Australia, and New Zealand; (iii) Europe, Middle East, Africa, and Latin America (“EMEALA”) for the Crocs Brand; and (iv) the HEYDUDE Brand. See Note 14 — Operating Segments and Geographic Information for additional information. The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”) and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report. Our accounting policies did not change during the nine months ended September 30, 2023, other than with respect to the new accounting pronouncements adopted as described in Note 2 — Recent Accounting Pronouncements. Reclassifications We have reclassified certain amounts in Note 4 — Accrued Expenses and Other Liabilities to conform to current period presentation. Use of Estimates U.S. GAAP requires us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, sales returns, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, valuation allowances, uncertain tax positions, income tax expense, share-based compensation expense, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, depreciation and amortization are reasonable based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our condensed consolidated financial statements may be materially affected. Condensed Consolidated Statements of Cash Flows - Supplemental Disclosures Nine Months Ended September 30, 2023 2022 (in thousands) Cash paid for interest $ 125,130 $ 89,080 Cash paid for income taxes 141,393 89,306 Cash paid for operating leases 53,679 45,192 Non-Cash Investing and Financing Activities: Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations $ 122,534 $ 96,292 Accrued purchases of property, equipment, and software (1) 9,445 6,341 Share issuance at Acquisition (2) — 270,396 (1) In the three months ended September 30, 2023, management identified an error in its quarterly condensed consolidated statement of cash flows for the nine months ended September 30, 2022 of $73.8 million within the amount reported in ‘Accrued purchases of property, equipment, and software.’ This amount represents noncash investing activity and had no impact on cash flows from operating, investing, or financing activities. We have corrected this amount here for the nine months ended September 30, 2022. Management has evaluated the materiality of this error from quantitative and qualitative perspectives and concluded the error was not material to the prior period. (2) On February 17, 2022 (the “Acquisition Date”), we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”), pursuant to a securities purchase agreement (the “SPA”) entered into on December 22, 2021. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Pronouncement Adopted Income Taxes The CHIPS and Science Act of 2022 (“CHIPS”) and the Inflation Reduction Act of 2022 (“IRA”) were signed into law on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The corporate alternative minimum tax and stock repurchase excise tax were effective as of January 1, 2023 and are the main provisions that are applicable to us. The Company is currently monitoring the impact of both the CHIPS and IRA but does not expect that any of the provisions included in these acts would result in a material impact to our deferred tax assets, liabilities, or income taxes payable. Additionally, we resumed our share repurchase program in July 2023. As such, we began recognizing an accrual for the stock repurchase excise tax, which did not have a material impact on our consolidated financial position. New Accounting Pronouncement Not Yet Adopted Pillar Two Global Minimum Tax On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15% global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework expected by 2024. We are continuing to evaluate the Pillar Two Framework and its potential impact on future periods. Other new pronouncements issued but not effective until after September 30, 2023 are not expected to have a material impact on our condensed consolidated financial statements. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | ACCRUED EXPENSES AND OTHER LIABILITIES Amounts reported in ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were: September 30, 2023 December 31, 2022 (in thousands) Accrued compensation and benefits $ 60,150 $ 55,474 Professional services 62,958 45,351 Fulfillment, freight, and duties 29,797 41,646 Return liabilities 24,946 27,651 Sales/use and value added taxes payable 26,736 27,249 Royalties payable and deferred revenue 12,297 10,528 Accrued rent and occupancy 8,724 8,972 Accrued legal fees (1) 4,251 2,602 Other (1) 18,301 19,951 Total accrued expenses and other liabilities $ 248,160 $ 239,424 (1) Amounts as of December 31, 2022 have been reclassified to conform to current period presentation. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES Right-of-Use Assets and Operating Lease Liabilities Amounts reported in the condensed consolidated balance sheets were: September 30, 2023 December 31, 2022 (in thousands) Assets: Right-of-use assets $ 313,608 $ 239,905 Liabilities: Current operating lease liabilities $ 61,111 $ 57,456 Long-term operating lease liabilities 286,910 215,119 Total operating lease liabilities $ 348,021 $ 272,575 We expect to move from our current corporate headquarters in the three months ended December 31, 2023. As of September 30, 2023, we estimated impairment losses of up to a maximum of approximately $16 million to our right-of-use-asset and property and equipment associated with our current corporate headquarters to be recognized in the three months ended December 31, 2023. This estimate is subject to change in the near term. Lease Costs and Other Information Lease-related costs reported within ‘Cost of sales’ and ‘Selling, general and administrative expenses’ in our condensed consolidated statements of income were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Operating lease cost $ 20,288 $ 17,058 $ 56,880 $ 47,945 Short-term lease cost 3,102 2,490 10,336 7,493 Variable lease cost 15,130 12,161 35,248 28,726 Total lease costs $ 38,520 $ 31,709 $ 102,464 $ 84,164 The weighted average remaining lease term and discount rate related to our lease liabilities as of September 30, 2023 were 7.2 years and 5.5%, respectively. As of September 30, 2022, the weighted average remaining lease term and discount rate related to our lease liabilities were 7.2 years and 3.6%, respectively. Maturities The maturities of our operating lease liabilities were: As of September 30, 2023 (in thousands) 2023 (remainder of year) $ 13,269 2024 76,434 2025 60,750 2026 52,309 2027 45,767 Thereafter 179,532 Total future minimum lease payments 428,061 Less: imputed interest (80,040) Total operating lease liabilities $ 348,021 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements All of our derivative instruments are classified as Level 2 of the fair value hierarchy and are reported in the condensed consolidated balance sheets within either ‘Prepaid expenses and other assets’ or ‘Accrued expenses and other liabilities’ at September 30, 2023 and December 31, 2022. The fair values of our derivative instruments were an insignificant liability at September 30, 2023 and an insignificant asset and insignificant liability at December 31, 2022. See Note 7 — Derivative Financial Instruments for more information. The carrying amounts of our cash, cash equivalents, and restricted cash, accounts receivable, accounts payable, current accrued expenses and other liabilities, and our Asia revolving facilities approximate their fair value as recorded due to the short-term maturity of these instruments. Our borrowing instruments are recorded at their carrying values in the condensed consolidated balance sheets, which may differ from their respective fair values. The Term Loan B Facility (as defined below) and the Notes (as defined below) are classified as Level 1 of the fair value hierarchy and are reported in our condensed consolidated balance sheet at face value, less unamortized issuance costs. The fair value of our Revolving Facility (as defined below) approximates its carrying value at September 30, 2023 and December 31, 2022 based on interest rates currently available to us for similar borrowings. The carrying value and fair value of our borrowing instruments as of September 30, 2023 and December 31, 2022 were: September 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Term Loan B Facility $ 1,090,000 $ 1,094,088 $ 1,675,000 $ 1,642,547 2029 Notes 350,000 290,210 350,000 297,596 2031 Notes 350,000 270,643 350,000 284,240 Revolving Facility 200,000 200,000 — — Non-Financial Assets and Liabilities Our non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS We transact business in various foreign entities and are therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. Dollar (“USD”) amounts of revenues, expenses, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in earnings caused by fluctuations in foreign exchange rates, we may enter into forward contracts to buy and sell foreign currency. By policy, we do not enter into these contracts for trading purposes or speculation. Counterparty default risk is considered low because the forward contracts we enter into are over-the-counter instruments transacted with highly-rated financial institutions. We were not required to and did not post collateral as of September 30, 2023 or December 31, 2022. Our derivative instruments are recorded at fair value as a derivative asset or liability in the condensed consolidated balance sheets within either ‘Prepaid expenses and other assets’ or ‘Accrued expenses and other liabilities’ at September 30, 2023 and December 31, 2022. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain components of its risk, even though hedge accounting does not apply, or we elect not to apply hedge accounting. We report derivative instruments with the same counterparty on a net basis when a master netting arrangement is in place. For the condensed consolidated statements of cash flows, we classify cash flows from derivative instruments at settlement in the same category as the cash flows from the related hedged items within ‘Cash provided by operating activities.’ As of September 30, 2023, we have derivatives not designated as hedging instruments (“non-hedged derivatives”), which consist of foreign currency forward contracts primarily used to hedge monetary assets and liabilities denominated in non-functional currencies. For our non-hedged derivatives, changes in fair value are recognized within ‘Foreign currency gains (losses), net’ in the condensed consolidated statements of income. We also have cash flow hedges (“hedged derivatives”) as of September 30, 2023. We are exposed to fluctuations in various foreign currencies against our functional currency, the U.S. Dollar. Specifically, we have subsidiaries that transact in currencies other than their functional currency. We use cash flow hedges to minimize the variability in cash flows caused by fluctuations in foreign currency exchange rates related to our external sales and external purchases of inventory. Currency forward agreements involve fixing the exchange rates for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date. We may also use currency option contracts under which we will pay a premium for the right to sell a specified amount of a foreign currency prior to the maturity date of the option. For derivatives designated and that qualify as cash flow hedges of foreign exchange risk, the gain or loss on the derivative is recorded in ‘Accumulated other comprehensive loss’ in the condensed consolidated balance sheets. In the period during which the hedged transaction affects earnings, the related gain or loss is subsequently reclassified to ‘Revenues’ or ‘Cost of sales’ in the condensed consolidated statement of income, which is consistent with the nature of the hedged transaction. During the three and nine months ended September 30, 2023, there was a gain of $0.3 million and loss of $0.5 million, respectively, recognized due to reclassification from ‘Accumulated other comprehensive loss’ to ‘Revenues’ or ‘Cost of sales’ related to our hedged derivatives. During the next twelve months, we estimate that a loss of approximately less than $0.1 million will be reclassified to our condensed consolidated statement of income. The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, reported within either ‘Accrued expenses and other liabilities’ or ‘Prepaid expenses and other assets’ in the condensed consolidated balance sheets, were: September 30, 2023 December 31, 2022 Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities (in thousands) Non-hedged derivatives: Forward foreign currency exchange contracts $ 3,159 $ (3,626) $ 345 $ (360) Hedged derivatives: Cash flow foreign currency contracts 5 (30) 348 (1,116) Total derivatives 3,164 (3,656) 693 (1,476) Netting of counterparty contracts (3,164) 3,164 (345) 345 Total derivatives, net of counterparty contracts $ — $ (492) $ 348 $ (1,131) The notional amounts of outstanding foreign currency forward exchange contracts presented below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position. September 30, 2023 December 31, 2022 Notional Fair Value Notional Fair Value (in thousands) Non-hedged derivatives: Singapore Dollar $ 48,296 $ (1,652) $ 26,760 $ 207 Indian Rupee 15,517 104 24,945 (10) South Korean Won 16,823 1,094 18,403 (320) British Pound Sterling 22,702 1,380 14,509 128 Japanese Yen 5,407 370 8,953 9 Euro 32,684 (1,919) 5,068 (29) Other currencies 2,735 156 — — Total non-hedged derivatives 144,164 (467) 98,638 (15) Hedged derivatives: Euro 10,143 5 51,914 (360) British Pound Sterling 4,874 (17) 23,025 235 South Korean Won 2,317 (1) 12,285 (756) Indian Rupee 3,770 (12) 7,203 113 Total hedged derivatives 21,104 (25) 94,427 (768) Total derivatives $ 165,268 $ (492) $ 193,065 $ (783) Latest maturity date, non-hedged derivatives October 2023 April 2023 Latest maturity date, hedged derivatives December 2023 June 2023 Amounts reported in ‘Foreign currency losses, net’ in the condensed consolidated statements of income include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts and were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Non-hedged derivatives: Foreign currency transaction losses $ (781) $ (2,126) $ (1,150) $ (6,178) Foreign currency forward exchange contracts gains (losses) (989) 1,733 (472) 5,063 Foreign currency losses, net $ (1,770) $ (393) $ (1,622) $ (1,115) |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
BORROWINGS | BORROWINGS Our long-term borrowings were as follows: Maturity Stated Interest Rate Effective Interest Rate September 30, 2023 December 31, 2022 (in thousands) Notes issuance of $350.0 million 2029 4.250 % 4.64 % $ 350,000 $ 350,000 Notes issuance of $350.0 million 2031 4.125 % 4.35 % 350,000 350,000 Term Loan B Facility 2029 1,090,000 1,675,000 Revolving Facility 200,000 — Total face value of long-term borrowings 1,990,000 2,375,000 Less: Unamortized issuance costs 51,332 56,973 Current portion of long-term borrowings (1) 20,000 20,000 Total long-term borrowings $ 1,918,668 $ 2,298,027 (1) Represents the current portion of the borrowings under the Term Loan B facility. At September 30, 2023 and December 31, 2022, $3.2 million and $10.8 million, respectively, of accrued interest related to our borrowings was reported in ‘Accounts payable’ in the condensed consolidated balance sheets. Senior Revolving Credit Facility In July 2019, the Company and certain of its subsidiaries (the “Borrowers”) entered into a Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), with the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the lenders. Since that time, we have amended the Credit Agreement, which, as amended to date, provides for a revolving credit facility of $750.0 million, which can be increased by an additional $250.0 million subject to certain conditions (the “Revolving Facility”). Borrowings under the Credit Agreement bear interest at a variable interest rate based on (A) a Base Rate (defined as the highest of (i) the Overnight Bank Funding Rate (as defined in the Credit Agreement), plus 0.25%, (ii) the Prime Rate (as defined in the Credit Agreement), and (iii) the Daily Simple SOFR (as defined in the Credit Agreement), plus 1.00%), plus an applicable margin ranging from 0.25% to 0.875% based on our leverage ratio or 1.35% to 1.975% for the Daily Simple SOFR based on the leverage ratio, or (B) the Term SOFR Rate (as defined in the Credit Agreement), plus an applicable margin ranging from 1.35% to 1.975% based on our leverage ratio for one-month interest periods and 1.40% to 2.025% based on our leverage ratio for three month interest periods. Borrowings under the Credit Agreement are secured by all of the assets of the Borrowers and guaranteed by certain other subsidiaries of the Borrowers. The Credit Agreement requires us to maintain a minimum interest coverage ratio of 3.00 to 1.00, and a maximum leverage ratio of (i) 4.00 to 1.00 from the quarter ended March 31, 2022 through, and including, the quarter ending December 31, 2023, (ii) 3.75 to 1.00 for the quarter ending March 31, 2024, (iii) 3.50 to 1.00 for the quarter ending June 30, 2024, and (iv) 3.25 to 1.00 for the quarter ending September 30, 2024 and thereafter (subject to adjustment in certain circumstances). The Credit Agreement permits, among other things, (i) stock repurchases subject to certain restrictions, including after giving effect to such stock repurchases, the maximum leverage ratio does not exceed certain levels; and (ii) certain acquisitions so long as there is borrowing availability under the Credit Agreement of at least $40.0 million. As of September 30, 2023, we were in compliance with all financial covenants under the Credit Agreement. As of September 30, 2023, the total commitments available from the lenders under the Revolving Facility were $750.0 million. At September 30, 2023, we had $200.0 million in outstanding borrowings and $1.3 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility. As of September 30, 2023 and December 31, 2022, we had $548.7 million and $748.7 million, respectively, of available borrowing capacity under the Revolving Facility, which matures November 2027. Term Loan B Facility On February 17, 2022, the Company entered into a credit agreement (the “Original Term Loan B Credit Agreement”) with Citibank, N.A., as administrative agent and lender, to among other things, finance a portion of the cash consideration for the Acquisition, which was amended (the "Amendment") on August 8, 2023 (the Original Term Loan B Credit Agreement, as amended by the Amendment, the “Term Loan B Credit Agreement”). The Original Term Loan B Credit Agreement provided for an aggregate term loan B facility in the principal amount of $2.0 billion. Among other things, the Amendment provided for a new $1.18 billion tranche of term loans (the “2023 Refinancing Term Loans” and, such facility, the "Term Loan B Facility"), which is secured by substantially all of the Company’s and each subsidiary guarantor’s assets on a pari passu basis with their obligations arising from the Credit Agreement and is scheduled to mature on February 17, 2029, subject to certain exceptions set forth in the Term Loan B Credit Agreement. Additionally, subject to certain conditions, including, without limitation, satisfying certain leverage ratios, the Company may, at any time, on one or more occasions, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities. Pursuant to the reduced interest rate margins applicable to the 2023 Refinancing Term Loans, each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to the Alternate Base Rate (as defined in the Term Loan B Credit Agreement), plus 2.00%. Each term loan borrowing which is a term benchmark borrowing bears interest at a rate per annum equal to the Adjusted Term SOFR Rate (as defined in the Term Loan B Credit Agreement) plus 3.00%. Outstanding principal under the Term Loan B Facility is payable on the last business day of each March, June, September and December, in a quarterly aggregate principal amount of $5.0 million. Quarterly aggregate principal payments began on June 30, 2022, with the remaining principal amount due on February 17, 2029, the maturity date. The 2023 Refinancing Term Loans replaced and refinanced all outstanding term loans under the Original Term Loan B Credit Agreement. As of September 30, 2023, we had $1,090.0 million in outstanding principal and the Term Loan B Facility was fully drawn with no remaining borrowing capacity. The Term Loan B Credit Agreement also contains customary affirmative and negative covenants, incurrence financial covenants, representations and warranties, events of default and other provisions. As of September 30, 2023, we were in compliance with all financial covenants under the Term Loan B Credit Agreement. Asia Revolving Credit Facilities During the nine months ended September 30, 2023, we had two revolving credit facilities in Asia, the revolving credit facility with China Merchants Bank Company Limited, Shanghai Branch (the “CMBC Facility”), which matured in January 2023 and provided up to 10.0 million RMB, or $1.5 million using current exchange rates as of January 2023, and the revolving credit facility with Citibank (China) Company Limited, Shanghai Branch (the “Citibank Facility”), which, as amended, provides up to an equivalent of $15.0 million. As of September 30, 2023, we had no borrowings outstanding on the Citibank Facility. As of December 31, 2022, we had no outstanding borrowings on the CMBC Facility, and we had borrowings outstanding of $4.3 million on the Citibank Facility. Senior Notes Issuances In March 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.250% Senior Notes due March 15, 2029 (the “2029 Notes”), pursuant to the indenture related thereto (as amended and/or supplemented to date, the “2029 Notes Indenture”). Additionally, in August 2021, the Company completed the issuance and sale of $350.0 million aggregate principal amount of 4.125% Senior Notes due August 15, 2031 (the “2031 Notes”), pursuant to the indenture related thereto (as amended and/or supplemented to date, “the 2031 Notes Indenture” and, together with the 2029 Notes Indenture, the “Indentures” and, each, an “Indenture”). Interest on each of the 2029 Notes and the 2031 Notes (collectively, the “Notes”) is payable semi-annually. The Company will have the option to redeem all or any portion of the 2029 Notes, at once or over time, at any time on or after March 15, 2024, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the 2029 Notes at any time before March 15, 2024 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before March 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 104.250% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will have the option to redeem all or any portion of the 2031 Notes, at once or over time, at any time on or after August 15, 2026, at a redemption price equal to 100% of the principal amount thereof, plus a premium declining ratably on an annual basis to par and accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Company will also have the option to redeem some or all of the 2031 Notes at any time before August 15, 2026 at a redemption price of 100% of the principal amount to be redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, at any time before August 15, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2031 Notes at a redemption price of 104.125% of the principal amount with the proceeds from certain equity issuances, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Notes rank pari passu in right of payment with all of the Company’s existing and future senior debt, including the Credit Agreement, and are senior in right of payment to any of the Company’s future debt that is, by its term, expressly subordinated in right of payment to the Notes. The Notes are unconditionally guaranteed by each of the Company’s restricted subsidiaries that is a borrower or guarantor under the Credit Agreement and by each of the Company’s wholly-owned restricted subsidiaries that guarantees any debt of the Company or any guarantor under any syndicated credit facility or capital markets debt in an aggregate principal amount in excess of $25.0 million. The Indentures contain covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock or make other restricted payments; declare or pay dividends or other payments; incur liens; enter into certain types of transactions with the Company’s affiliates; and consolidate or merge with or into other companies. As of September 30, 2023, we were in compliance with all financial covenants under the Notes. |
COMMON STOCK REPURCHASE PROGRAM
COMMON STOCK REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
COMMON STOCK REPURCHASE PROGRAM | COMMON STOCK REPURCHASE PROGRAM During the three and nine months ended September 30, 2023, we repurchased 1.4 million shares of our common stock at a cost of $150.0 million, including commissions. As of September 30, 2023, we also have recorded an accrual for the stock repurchase excise tax, which is reported in ‘Accrued expenses and other liabilities’ and ‘Treasury stock’ in our condensed consolidated balance sheet. During the three and nine months ended September 30, 2022, we did not repurchase any shares of our common stock. As of September 30, 2023, we had remaining authorization to repurchase $900.0 million of our common stock, subject to restrictions under our Indentures, Credit Agreement, and Term Loan B Credit Agreement. |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Revenues by channel and brand were: Three Months Ended September 30, 2023 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 369,177 $ 146,501 $ 515,678 Direct-to-consumer 429,592 100,447 530,039 Total revenues $ 798,769 $ 246,948 $ 1,045,717 Three Months Ended September 30, 2022 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 353,304 $ 181,768 $ 535,072 Direct-to-consumer 362,403 87,619 450,022 Total revenues $ 715,707 $ 269,387 $ 985,094 Nine Months Ended September 30, 2023 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 1,187,081 $ 463,189 $ 1,650,270 Direct-to-consumer 1,093,416 258,564 1,351,980 Total revenues $ 2,280,497 $ 721,753 $ 3,002,250 Nine Months Ended September 30, 2022 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 1,090,073 $ 431,186 $ 1,521,259 Direct-to-consumer 903,075 185,489 1,088,564 Total revenues $ 1,993,148 $ 616,675 $ 2,609,823 For information on revenues by reportable operating segment, see Note 14 — Operating Segments and Geographic Information. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income tax expense and effective tax rates were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except effective tax rate) Income before income taxes $ 233,405 $ 229,575 $ 702,413 $ 542,939 Income tax expense 56,380 60,226 163,433 140,515 Effective tax rate 24.2 % 26.2 % 23.3 % 25.9 % The decrease in the effective tax rate for the three months ended September 30, 2023, compared to the same period in 2022, was primarily driven by a shift in the mix of the Company's domestic and foreign earnings. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate due to differences in income tax rates between U.S. and foreign jurisdictions. We had unrecognized tax benefits of $218.4 million and $219.4 million at September 30, 2023 and December 31, 2022, respectively, and we do not expect any significant changes in tax benefits in the next twelve months. During the nine months ended September 30, 2023, income tax expense increased $22.9 million compared to the same period in 2022. The effective tax rate for the nine months ended September 30, 2023 was 23.3% compared to an effective tax rate of 25.9% for the same period in 2022, a 2.6% decrease. This decrease in the effective tax rate was primarily driven by a shift in the mix of the Company's domestic and foreign earnings. Our effective income tax rate, for each period presented, also differs from the federal U.S. statutory rate due to differences in income tax rates between U.S. and foreign jurisdictions. Our tax rate is volatile and may increase or decrease with changes in, among other things, the amount of income or loss by jurisdiction, our ability to utilize net operating losses and foreign tax credits, changes in tax laws, and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled, or when additional information becomes available. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic and diluted earnings per common share (“EPS”) for the nine months ended September 30, 2023 and 2022 were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except per share data) Numerator: Net income $ 177,025 $ 169,349 $ 538,980 $ 402,424 Denominator: Weighted average common shares outstanding - basic 61,143 61,693 61,670 61,042 Plus: Dilutive effect of stock options and unvested restricted stock units 472 674 610 798 Weighted average common shares outstanding - diluted 61,615 62,367 62,280 61,840 Net income per common share: Basic $ 2.90 $ 2.75 $ 8.74 $ 6.59 Diluted $ 2.87 $ 2.72 $ 8.65 $ 6.51 In the three and nine months ended September 30, 2023 and 2022, an insignificant number of outstanding shares issued under share-based compensation awards were anti-dilutive and, therefore, excluded from the calculation of diluted EPS. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Purchase Commitments As of September 30, 2023, we had purchase commitments to third-party manufacturers, primarily for materials and supplies used in the manufacture of our products, for an aggregate of $276.4 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded. Other We are regularly subject to, and are currently undergoing, audits by various tax authorities in the United States and several foreign jurisdictions, including customs duties, import, and other taxes for prior tax years. During our normal course of business, we may make certain indemnities, commitments, and guarantees under which we may be required to make payments. We cannot determine a range of estimated future payments and have not recorded any liability for indemnities, commitments, and guarantees in the accompanying condensed consolidated balance sheets. We are also subject to litigation from time to time in the ordinary course of business, including employment, intellectual property, and product liability claims. Other than as set forth below, we are not party to any other pending legal proceedings that we believe would reasonably have a material adverse impact on our business, financial results, and cash flows. For all claims and disputes, we have accrued estimated losses of $2.7 million within ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheet as of September 30, 2023. As we are able, we estimate reasonably possible losses or a range of reasonably possible losses. As of September 30, 2023, we estimated that reasonably possible losses associated with these claims and other disputes could potentially exceed amounts accrued by $0.7 million. |
OPERATING SEGMENTS AND GEOGRAPH
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION | OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION We have four reportable operating segments. For the Crocs Brand, we have three reportable operating segments based on the geographic nature of our operations: North America, Asia Pacific, and EMEALA. Our HEYDUDE Brand is also a reportable operating segment. Each of the reportable operating segments derives its revenues from the sale of footwear, apparel, and accessories to external customers. Additionally, Crocs ‘Brand corporate’ costs represent operating expense that includes product creation, design, and marketing expenses centrally managed for the Crocs Brand, as well as certain royalty income. Crocs Brand corporate costs are included within the Crocs Brand for presentation purposes to align with the way management views the Company. ‘Enterprise corporate’ costs include global corporate costs associated with both brands, including legal, information technology, human resources, and finance, as well as costs associated with global digital operations. Each segment’s performance is evaluated based on segment results without allocating Brand corporate or Enterprise corporate expenses. Segment profits or losses include adjustments to eliminate inter-segment sales. Reconciling items between segment income from operations and income from operations consist of unallocated brand and enterprise corporate and other expenses, as well as inter-segment eliminations. We do not report asset information by segment because that information is not used to evaluate performance or allocate resources between segments. The following tables set forth information related to reportable operating segments: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Revenues: North America $ 480,744 $ 445,327 $ 1,306,609 $ 1,187,713 Asia Pacific 175,199 138,450 513,459 383,187 EMEALA 142,826 131,929 460,429 422,226 Brand corporate — 1 — 22 Total Crocs Brand 798,769 715,707 2,280,497 1,993,148 HEYDUDE Brand (1) 246,948 269,387 721,753 616,675 Total consolidated revenues $ 1,045,717 $ 985,094 $ 3,002,250 $ 2,609,823 Income from operations: North America $ 218,018 $ 191,438 $ 560,358 $ 498,413 Asia Pacific 69,762 40,286 203,203 121,823 EMEALA 49,939 40,506 176,844 128,819 Brand corporate (40,263) (36,896) (107,260) (95,864) Total Crocs Brand 297,456 235,334 833,145 653,191 HEYDUDE Brand (1) 31,776 79,056 173,905 136,381 Reconciliation of total segment income from operations to income before income taxes: Enterprise corporate (55,380) (50,327) (179,781) (158,868) Income from operations 273,852 264,063 827,269 630,704 Foreign currency losses, net (1,770) (393) (1,622) (1,115) Interest income 506 31 1,225 219 Interest expense (39,207) (34,142) (124,907) (86,357) Other income (expense), net 24 16 448 (512) Income before income taxes $ 233,405 $ 229,575 $ 702,413 $ 542,939 Depreciation and amortization: North America $ 6,394 $ 2,705 $ 15,179 $ 7,514 Asia Pacific 696 508 1,995 1,528 EMEALA 1,416 746 3,997 2,166 Brand corporate 186 164 2,057 529 Total Crocs Brand 8,692 4,123 23,228 11,737 HEYDUDE Brand (1) 3,919 3,500 10,987 8,750 Enterprise corporate 2,140 2,121 6,316 6,011 Total consolidated depreciation and amortization $ 14,751 $ 9,744 $ 40,531 $ 26,498 (1) We acquired HEYDUDE on February 17, 2022 and in connection therewith added the HEYDUDE Brand as a new operating segment. Therefore, the amounts shown above for the nine months ended September 30, 2022 represent results during the partial period beginning February 17, 2022 through September 30, 2022. |
ACQUISITION OF HEYDUDE
ACQUISITION OF HEYDUDE | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION OF HEYDUDE | ACQUISITION OF HEYDUDE On February 17, 2022, we acquired 100% of the equity of HEYDUDE, pursuant to the SPA. HEYDUDE is engaged in the business of distributing and selling casual footwear under the brand name “HEYDUDE.” The Acquisition has allowed us to diversify and expand our business by adding a second brand to the Crocs, Inc. portfolio. The aggregate preliminary purchase price at the closing of the Acquisition was $2.3 billion. We paid aggregate consideration of $2.05 billion in cash (the “Cash Consideration”), subject to adjustment based on, among other things, the cash, indebtedness, transaction expenses, and working capital of the companies comprising HEYDUDE and their respective subsidiaries as of the Acquisition Date, and issued 2,852,280 shares of the Company’s common stock to one of the sellers (the “Equity Consideration Shares”). The Equity Consideration Shares were subject to a lock-up period beginning on the Acquisition Date, which has since expired so all of the Equity Consideration Shares have been released from the lock-up. The purchase price paid to the sellers is final. The Cash Consideration was financed via the Company’s entry into the $2.0 billion Term Loan B Facility and $50.0 million of borrowings under the Revolving Facility. As a result of the Acquisition, HEYDUDE became wholly owned by Crocs, Inc. Accordingly, the results of HEYDUDE are included in our condensed consolidated financial statements from the Acquisition Date and are reported in the HEYDUDE Brand operating segment. HEYDUDE contributed revenue of $616.7 million and income from operations of $136.4 million from the Acquisition Date through September 30, 2022. Purchase Price Allocation The Acquisition was accounted for in accordance with the ASC Topic 805 Business Combinations . As a result, we applied acquisition accounting, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their estimated fair values as of the Acquisition Date. For certain assets and liabilities, those fair values were consistent with historical carrying values. The fair value of inventory was determined using both a market approach and a cost approach. With respect to intangible assets, the estimated fair value was based on the Multi Period Excess Earnings approach for the trademark and the distributor method for the customer relationships. These models used primarily Level 2 and Level 3 inputs, including an estimate of future revenues, future cash flows, and discount rates. The following table summarizes the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the Acquisition Date: February 17, 2022 (in thousands) Cash and cash equivalents $ 6,232 Accounts receivable, net 68,698 Inventories 155,773 Prepaid expenses and other assets 7,880 Intangible assets 1,780,000 Goodwill 710,034 Right-of-use assets 2,844 Accounts payable (30,017) Accrued expenses and other liabilities (18,860) Income taxes payable (30,572) Long-term deferred tax liability (312,656) Long-term income taxes payable (13,004) Operating lease liabilities (2,843) Net assets acquired $ 2,323,509 Intangible Assets The components of intangible assets acquired in connection with the Acquisition were as follows: Weighted-Average Useful Life Amortization Method Estimated Fair Value (in thousands) Customer relationships 15 Straight-line $ 210,000 Trademark Indefinite — 1,570,000 Total intangible assets $ 1,780,000 Goodwill The excess of the purchase price over the fair value of the acquired business's net assets represents goodwill. The goodwill amount of $710.0 million at September 30, 2023 includes an aggregate adjustment of $3.3 million recorded in the three months ended March 31, 2023 as a result of changes to preliminary valuation estimates. The purchase price allocation was finalized during the three months ended March 31, 2023. Goodwill largely consists of the acquired workforce and economies of scale resulting from the Acquisition. The total goodwill amount acquired was assigned to the HEYDUDE operating segment. None of the goodwill will be deductible for income tax purposes. Escrow and Holdback Amounts Additionally, $125.0 million of the Cash Consideration (the “Escrow Amount”) was placed in an escrow account to partially secure the indemnification obligations of the sellers. As of September 30, 2023, a substantial portion of the Escrow Amount remained in the escrow account in connection with claims that were noticed prior to the date that was 18 months after the Acquisition Date but not yet resolved by that date, as provided in the SPA. Further, $8.5 million of the Cash Consideration (the “Adjustment Holdback Amount”) was held back and retained as security (but not as the sole source of recovery) for any downward adjustments to the purchase price made in accordance with the SPA. During the year ended December 31, 2022, the Adjustment Holdback Amount was paid to the sellers. Acquisition-related Costs Costs incurred to complete the Acquisition are expensed as incurred and included in ‘Selling, general, and administrative expenses’ in our condensed consolidated statement of income. During the nine months ended September 30, 2023, no Acquisition-related costs were recognized. During the nine months ended September 30, 2022, $20.6 million of Acquisition-related costs were recognized. Unaudited Pro Forma Information The following unaudited pro forma financial information for the three and nine months ended September 30, 2022 combines the historical results of Crocs and HEYDUDE, assuming that the companies were combined as of January 1, 2021 and include business combination accounting effects from the Acquisition, including amortization charges from acquired intangible assets, adjustments to the fair value of inventory, interest expense on the financing transactions used to fund the Acquisition, and Acquisition-related transaction costs and tax-related effects. The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place on January 1, 2021. Three Months Ended September 30, Nine Months Ended September 30, 2022 2022 (in thousands) Revenues $ 985,094 $ 2,700,129 Net income 169,349 472,071 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET ‘Property and equipment, net’ consists of the following: September 30, 2023 December 31, 2022 (in thousands) Machinery and equipment $ 161,627 $ 146,821 Leasehold improvements 92,825 76,363 Construction-in-progress 54,931 28,699 Furniture, fixtures, and other 32,377 26,782 Property and equipment 341,760 278,665 Less: Accumulated depreciation and amortization (118,699) (97,136) Property and equipment, net $ 223,061 $ 181,529 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net income | $ 177,025 | $ 169,349 | $ 538,980 | $ 402,424 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Unless otherwise noted in this report, any description of the “Company,” “we,” “us,” or “our” includes Crocs, Inc. and our consolidated subsidiaries within our reportable operating segments and corporate operations. We are engaged in the design, development, worldwide marketing, distribution, and sale of casual lifestyle footwear and accessories for women, men, and children. We strive to be the global leader in the sale of casual footwear characterized by functionality, comfort, color, and lightweight design. |
Segment Reporting | Our reportable operating segments include: (i) North America for the Crocs Brand, operating throughout the United States and Canada; (ii) Asia Pacific for the Crocs Brand, operating throughout Asia, Australia, and New Zealand; (iii) Europe, Middle East, Africa, and Latin America (“EMEALA”) for the Crocs Brand; and (iv) the HEYDUDE Brand. See Note 14 — Operating Segments and Geographic Information for additional information. |
Principles of Consolidation | The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our wholly-owned subsidiaries and reflect all adjustments which are necessary for a fair statement of the financial position, results of operations, and cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such unaudited condensed consolidated interim financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.These unaudited condensed consolidated interim financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”) and have been prepared on a consistent basis with the accounting policies described in Note 1 of the Notes to Consolidated Financial Statements included in our Annual Report. |
Reclassifications | Reclassifications We have reclassified certain amounts in Note 4 — Accrued Expenses and Other Liabilities to conform to current period presentation. |
Use of Estimates | Use of Estimates U.S. GAAP requires us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable, based on information available at the time they are made. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, sales returns, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, valuation allowances, uncertain tax positions, income tax expense, share-based compensation expense, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, depreciation and amortization are reasonable based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our condensed consolidated financial statements may be materially affected. |
New Accounting Pronouncement Adopted and Not Yet Adopted | New Accounting Pronouncement Adopted Income Taxes The CHIPS and Science Act of 2022 (“CHIPS”) and the Inflation Reduction Act of 2022 (“IRA”) were signed into law on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The corporate alternative minimum tax and stock repurchase excise tax were effective as of January 1, 2023 and are the main provisions that are applicable to us. The Company is currently monitoring the impact of both the CHIPS and IRA but does not expect that any of the provisions included in these acts would result in a material impact to our deferred tax assets, liabilities, or income taxes payable. Additionally, we resumed our share repurchase program in July 2023. As such, we began recognizing an accrual for the stock repurchase excise tax, which did not have a material impact on our consolidated financial position. New Accounting Pronouncement Not Yet Adopted Pillar Two Global Minimum Tax On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15% global minimum tax rate for large multinational corporations. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Pillar Two Framework expected by 2024. We are continuing to evaluate the Pillar Two Framework and its potential impact on future periods. Other new pronouncements issued but not effective until after September 30, 2023 are not expected to have a material impact on our condensed consolidated financial statements. |
Fair Value of Non-Financial Assets and Liabilities | Non-Financial Assets and Liabilities Our non-financial assets, which primarily consist of property and equipment, right-of-use assets, goodwill, and other intangible assets, are not required to be carried at fair value on a recurring basis and are reported at carrying value. The fair values of these assets are determined, as required, based on Level 3 measurements, including estimates of the amount and timing of future cash flows based upon historical experience, expected market conditions, and management’s plans. |
Derivatives Financial Instruments | During the three and nine months ended September 30, 2023, there was a gain of $0.3 million and loss of $0.5 million, respectively, recognized due to reclassification from ‘Accumulated other comprehensive loss’ to ‘Revenues’ or ‘Cost of sales’ related to our hedged derivatives. During the next twelve months, we estimate that a loss of approximately less than $0.1 million will be reclassified to our condensed consolidated statement of income. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Supplemental Non-Cash Investing and Financing Activities | Condensed Consolidated Statements of Cash Flows - Supplemental Disclosures Nine Months Ended September 30, 2023 2022 (in thousands) Cash paid for interest $ 125,130 $ 89,080 Cash paid for income taxes 141,393 89,306 Cash paid for operating leases 53,679 45,192 Non-Cash Investing and Financing Activities: Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations $ 122,534 $ 96,292 Accrued purchases of property, equipment, and software (1) 9,445 6,341 Share issuance at Acquisition (2) — 270,396 (1) In the three months ended September 30, 2023, management identified an error in its quarterly condensed consolidated statement of cash flows for the nine months ended September 30, 2022 of $73.8 million within the amount reported in ‘Accrued purchases of property, equipment, and software.’ This amount represents noncash investing activity and had no impact on cash flows from operating, investing, or financing activities. We have corrected this amount here for the nine months ended September 30, 2022. Management has evaluated the materiality of this error from quantitative and qualitative perspectives and concluded the error was not material to the prior period. (2) On February 17, 2022 (the “Acquisition Date”), we acquired (the “Acquisition”) 100% of the equity of a privately-owned casual footwear brand business (“HEYDUDE”), pursuant to a securities purchase agreement (the “SPA”) entered into on December 22, 2021. |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | Amounts reported in ‘Accrued expenses and other liabilities’ in the condensed consolidated balance sheets were: September 30, 2023 December 31, 2022 (in thousands) Accrued compensation and benefits $ 60,150 $ 55,474 Professional services 62,958 45,351 Fulfillment, freight, and duties 29,797 41,646 Return liabilities 24,946 27,651 Sales/use and value added taxes payable 26,736 27,249 Royalties payable and deferred revenue 12,297 10,528 Accrued rent and occupancy 8,724 8,972 Accrued legal fees (1) 4,251 2,602 Other (1) 18,301 19,951 Total accrued expenses and other liabilities $ 248,160 $ 239,424 (1) Amounts as of December 31, 2022 have been reclassified to conform to current period presentation. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Rights-of-Use Assets and Operating Lease Liabilities | Amounts reported in the condensed consolidated balance sheets were: September 30, 2023 December 31, 2022 (in thousands) Assets: Right-of-use assets $ 313,608 $ 239,905 Liabilities: Current operating lease liabilities $ 61,111 $ 57,456 Long-term operating lease liabilities 286,910 215,119 Total operating lease liabilities $ 348,021 $ 272,575 |
Schedule of Lease Costs and Other Information | Lease-related costs reported within ‘Cost of sales’ and ‘Selling, general and administrative expenses’ in our condensed consolidated statements of income were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Operating lease cost $ 20,288 $ 17,058 $ 56,880 $ 47,945 Short-term lease cost 3,102 2,490 10,336 7,493 Variable lease cost 15,130 12,161 35,248 28,726 Total lease costs $ 38,520 $ 31,709 $ 102,464 $ 84,164 |
Schedule of Maturities of Operating Lease Liabilities | The maturities of our operating lease liabilities were: As of September 30, 2023 (in thousands) 2023 (remainder of year) $ 13,269 2024 76,434 2025 60,750 2026 52,309 2027 45,767 Thereafter 179,532 Total future minimum lease payments 428,061 Less: imputed interest (80,040) Total operating lease liabilities $ 348,021 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of the Company's Outstanding Borrowings | The carrying value and fair value of our borrowing instruments as of September 30, 2023 and December 31, 2022 were: September 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Term Loan B Facility $ 1,090,000 $ 1,094,088 $ 1,675,000 $ 1,642,547 2029 Notes 350,000 290,210 350,000 297,596 2031 Notes 350,000 270,643 350,000 284,240 Revolving Facility 200,000 200,000 — — |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Derivative Assets and Liabilities | The fair values of derivative assets and liabilities, net, all of which are classified as Level 2, reported within either ‘Accrued expenses and other liabilities’ or ‘Prepaid expenses and other assets’ in the condensed consolidated balance sheets, were: September 30, 2023 December 31, 2022 Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities (in thousands) Non-hedged derivatives: Forward foreign currency exchange contracts $ 3,159 $ (3,626) $ 345 $ (360) Hedged derivatives: Cash flow foreign currency contracts 5 (30) 348 (1,116) Total derivatives 3,164 (3,656) 693 (1,476) Netting of counterparty contracts (3,164) 3,164 (345) 345 Total derivatives, net of counterparty contracts $ — $ (492) $ 348 $ (1,131) |
Schedule of Derivative Financial Instruments Notional Amounts on Outstanding Positions | The notional amounts of outstanding foreign currency forward exchange contracts presented below report the total U.S. Dollar equivalent position and the net contract fair values for each foreign currency position. September 30, 2023 December 31, 2022 Notional Fair Value Notional Fair Value (in thousands) Non-hedged derivatives: Singapore Dollar $ 48,296 $ (1,652) $ 26,760 $ 207 Indian Rupee 15,517 104 24,945 (10) South Korean Won 16,823 1,094 18,403 (320) British Pound Sterling 22,702 1,380 14,509 128 Japanese Yen 5,407 370 8,953 9 Euro 32,684 (1,919) 5,068 (29) Other currencies 2,735 156 — — Total non-hedged derivatives 144,164 (467) 98,638 (15) Hedged derivatives: Euro 10,143 5 51,914 (360) British Pound Sterling 4,874 (17) 23,025 235 South Korean Won 2,317 (1) 12,285 (756) Indian Rupee 3,770 (12) 7,203 113 Total hedged derivatives 21,104 (25) 94,427 (768) Total derivatives $ 165,268 $ (492) $ 193,065 $ (783) Latest maturity date, non-hedged derivatives October 2023 April 2023 Latest maturity date, hedged derivatives December 2023 June 2023 |
Schedule of Gain (Losses) from Foreign Currency Transactions and Derivative Contracts | Amounts reported in ‘Foreign currency losses, net’ in the condensed consolidated statements of income include both realized and unrealized gains (losses) from foreign currency transactions and derivative contracts and were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Non-hedged derivatives: Foreign currency transaction losses $ (781) $ (2,126) $ (1,150) $ (6,178) Foreign currency forward exchange contracts gains (losses) (989) 1,733 (472) 5,063 Foreign currency losses, net $ (1,770) $ (393) $ (1,622) $ (1,115) |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Other Term Borrowings | Our long-term borrowings were as follows: Maturity Stated Interest Rate Effective Interest Rate September 30, 2023 December 31, 2022 (in thousands) Notes issuance of $350.0 million 2029 4.250 % 4.64 % $ 350,000 $ 350,000 Notes issuance of $350.0 million 2031 4.125 % 4.35 % 350,000 350,000 Term Loan B Facility 2029 1,090,000 1,675,000 Revolving Facility 200,000 — Total face value of long-term borrowings 1,990,000 2,375,000 Less: Unamortized issuance costs 51,332 56,973 Current portion of long-term borrowings (1) 20,000 20,000 Total long-term borrowings $ 1,918,668 $ 2,298,027 (1) Represents the current portion of the borrowings under the Term Loan B facility. |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenues by Channel and Brand | Revenues by channel and brand were: Three Months Ended September 30, 2023 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 369,177 $ 146,501 $ 515,678 Direct-to-consumer 429,592 100,447 530,039 Total revenues $ 798,769 $ 246,948 $ 1,045,717 Three Months Ended September 30, 2022 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 353,304 $ 181,768 $ 535,072 Direct-to-consumer 362,403 87,619 450,022 Total revenues $ 715,707 $ 269,387 $ 985,094 Nine Months Ended September 30, 2023 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 1,187,081 $ 463,189 $ 1,650,270 Direct-to-consumer 1,093,416 258,564 1,351,980 Total revenues $ 2,280,497 $ 721,753 $ 3,002,250 Nine Months Ended September 30, 2022 Crocs Brand HEYDUDE Brand Total (in thousands) Channel: Wholesale $ 1,090,073 $ 431,186 $ 1,521,259 Direct-to-consumer 903,075 185,489 1,088,564 Total revenues $ 1,993,148 $ 616,675 $ 2,609,823 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense and Effective Tax Rates | Income tax expense and effective tax rates were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except effective tax rate) Income before income taxes $ 233,405 $ 229,575 $ 702,413 $ 542,939 Income tax expense 56,380 60,226 163,433 140,515 Effective tax rate 24.2 % 26.2 % 23.3 % 25.9 % |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | Basic and diluted earnings per common share (“EPS”) for the nine months ended September 30, 2023 and 2022 were: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands, except per share data) Numerator: Net income $ 177,025 $ 169,349 $ 538,980 $ 402,424 Denominator: Weighted average common shares outstanding - basic 61,143 61,693 61,670 61,042 Plus: Dilutive effect of stock options and unvested restricted stock units 472 674 610 798 Weighted average common shares outstanding - diluted 61,615 62,367 62,280 61,840 Net income per common share: Basic $ 2.90 $ 2.75 $ 8.74 $ 6.59 Diluted $ 2.87 $ 2.72 $ 8.65 $ 6.51 |
OPERATING SEGMENTS AND GEOGRA_2
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Information Related to Reportable Operating Segments | The following tables set forth information related to reportable operating segments: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (in thousands) Revenues: North America $ 480,744 $ 445,327 $ 1,306,609 $ 1,187,713 Asia Pacific 175,199 138,450 513,459 383,187 EMEALA 142,826 131,929 460,429 422,226 Brand corporate — 1 — 22 Total Crocs Brand 798,769 715,707 2,280,497 1,993,148 HEYDUDE Brand (1) 246,948 269,387 721,753 616,675 Total consolidated revenues $ 1,045,717 $ 985,094 $ 3,002,250 $ 2,609,823 Income from operations: North America $ 218,018 $ 191,438 $ 560,358 $ 498,413 Asia Pacific 69,762 40,286 203,203 121,823 EMEALA 49,939 40,506 176,844 128,819 Brand corporate (40,263) (36,896) (107,260) (95,864) Total Crocs Brand 297,456 235,334 833,145 653,191 HEYDUDE Brand (1) 31,776 79,056 173,905 136,381 Reconciliation of total segment income from operations to income before income taxes: Enterprise corporate (55,380) (50,327) (179,781) (158,868) Income from operations 273,852 264,063 827,269 630,704 Foreign currency losses, net (1,770) (393) (1,622) (1,115) Interest income 506 31 1,225 219 Interest expense (39,207) (34,142) (124,907) (86,357) Other income (expense), net 24 16 448 (512) Income before income taxes $ 233,405 $ 229,575 $ 702,413 $ 542,939 Depreciation and amortization: North America $ 6,394 $ 2,705 $ 15,179 $ 7,514 Asia Pacific 696 508 1,995 1,528 EMEALA 1,416 746 3,997 2,166 Brand corporate 186 164 2,057 529 Total Crocs Brand 8,692 4,123 23,228 11,737 HEYDUDE Brand (1) 3,919 3,500 10,987 8,750 Enterprise corporate 2,140 2,121 6,316 6,011 Total consolidated depreciation and amortization $ 14,751 $ 9,744 $ 40,531 $ 26,498 (1) We acquired HEYDUDE on February 17, 2022 and in connection therewith added the HEYDUDE Brand as a new operating segment. Therefore, the amounts shown above for the nine months ended September 30, 2022 represent results during the partial period beginning February 17, 2022 through September 30, 2022. |
ACQUISITION OF HEYDUDE (Tables)
ACQUISITION OF HEYDUDE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the final allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the Acquisition Date: February 17, 2022 (in thousands) Cash and cash equivalents $ 6,232 Accounts receivable, net 68,698 Inventories 155,773 Prepaid expenses and other assets 7,880 Intangible assets 1,780,000 Goodwill 710,034 Right-of-use assets 2,844 Accounts payable (30,017) Accrued expenses and other liabilities (18,860) Income taxes payable (30,572) Long-term deferred tax liability (312,656) Long-term income taxes payable (13,004) Operating lease liabilities (2,843) Net assets acquired $ 2,323,509 |
Schedule of Intangible Assets Acquired in Connection with the Acquisition | The components of intangible assets acquired in connection with the Acquisition were as follows: Weighted-Average Useful Life Amortization Method Estimated Fair Value (in thousands) Customer relationships 15 Straight-line $ 210,000 Trademark Indefinite — 1,570,000 Total intangible assets $ 1,780,000 |
Schedule of Pro Forma Information | The pro forma information as presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place on January 1, 2021. Three Months Ended September 30, Nine Months Ended September 30, 2022 2022 (in thousands) Revenues $ 985,094 $ 2,700,129 Net income 169,349 472,071 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | ‘Property and equipment, net’ consists of the following: September 30, 2023 December 31, 2022 (in thousands) Machinery and equipment $ 161,627 $ 146,821 Leasehold improvements 92,825 76,363 Construction-in-progress 54,931 28,699 Furniture, fixtures, and other 32,377 26,782 Property and equipment 341,760 278,665 Less: Accumulated depreciation and amortization (118,699) (97,136) Property and equipment, net $ 223,061 $ 181,529 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Feb. 17, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash paid for interest | $ 125,130 | $ 89,080 | ||
Cash paid for income taxes | 141,393 | 89,306 | ||
Cash paid for operating leases | 53,679 | 45,192 | ||
Non-Cash Investing and Financing Activities: | ||||
Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations | 122,534 | 96,292 | ||
Accrued purchases of property, equipment, and software (1) | 9,445 | 6,341 | ||
Share issuance at acquisition | 0 | 270,396 | ||
Business Acquisition [Line Items] | ||||
Accrued purchases of property, equipment, and software (1) | $ 9,445 | $ 6,341 | ||
Revision of Prior Period, Error Correction, Adjustment | ||||
Non-Cash Investing and Financing Activities: | ||||
Accrued purchases of property, equipment, and software (1) | $ 73,800 | |||
Business Acquisition [Line Items] | ||||
Accrued purchases of property, equipment, and software (1) | $ 73,800 | |||
HEYDUDE | ||||
Business Acquisition [Line Items] | ||||
Percentage of voting interests acquired | 100% |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 60,150 | $ 55,474 |
Professional services | 62,958 | 45,351 |
Fulfillment, freight, and duties | 29,797 | 41,646 |
Return liabilities | 24,946 | 27,651 |
Sales/use and value added taxes payable | 26,736 | 27,249 |
Royalties payable and deferred revenue | 12,297 | 10,528 |
Accrued rent and occupancy | 8,724 | 8,972 |
Accrued legal fees | 4,251 | 2,602 |
Other | 18,301 | 19,951 |
Total accrued expenses and other liabilities | $ 248,160 | $ 239,424 |
LEASES - Schedule of Rights-of-
LEASES - Schedule of Rights-of-Use Assets and Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets: | ||
Right-of-use assets | $ 313,608 | $ 239,905 |
Liabilities: | ||
Current operating lease liabilities | 61,111 | 57,456 |
Long-term operating lease liabilities | 286,910 | 215,119 |
Total operating lease liabilities | $ 348,021 | $ 272,575 |
LEASES - Schedule of Lease Cost
LEASES - Schedule of Lease Costs and Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease cost | $ 20,288 | $ 17,058 | $ 56,880 | $ 47,945 |
Short-term lease cost | 3,102 | 2,490 | 10,336 | 7,493 |
Variable lease cost | 15,130 | 12,161 | 35,248 | 28,726 |
Total lease costs | $ 38,520 | $ 31,709 | $ 102,464 | $ 84,164 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description [Line Items] | |||
Weighted average remaining lease term | 7 years 2 months 12 days | 7 years 2 months 12 days | |
Weighted average discount rate (in percent) | 5.50% | 3.60% | |
Forecast | |||
Lessee, Lease, Description [Line Items] | |||
Impairment loss, operating lease | $ 16 |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 (remainder of year) | $ 13,269 | |
2024 | 76,434 | |
2025 | 60,750 | |
2026 | 52,309 | |
2027 | 45,767 | |
Thereafter | 179,532 | |
Total future minimum lease payments | 428,061 | |
Less: imputed interest | (80,040) | |
Total operating lease liabilities | $ 348,021 | $ 272,575 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Carrying Value | Line of Credit | Term Loan B Facility | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | $ 1,090,000 | $ 1,675,000 |
Carrying Value | Line of Credit | Revolving Facility | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 200,000 | 0 |
Carrying Value | 2029 Notes | Senior Notes | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 350,000 | 350,000 |
Carrying Value | 2031 Notes | Senior Notes | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 350,000 | 350,000 |
Fair Value | Line of Credit | Term Loan B Facility | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 1,094,088 | 1,642,547 |
Fair Value | Line of Credit | Revolving Facility | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 200,000 | 0 |
Fair Value | 2029 Notes | Senior Notes | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | 290,210 | 297,596 |
Fair Value | 2031 Notes | Senior Notes | ||
Fair Value and Carrying Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding borrowings | $ 270,643 | $ 284,240 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Foreign currency cash flow hedge gain (loss) reclassified to earnings, net | $ 0.3 | $ (0.5) |
Foreign currency cash flow hedge loss to be reclassified during next 12 months | $ (0.1) | $ (0.1) |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Fair Value of Derivative Assets and Liabilities (Details) - Level 2 - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Foreign Currency Derivatives | ||
Derivative asset, net foreign currency forward contract derivatives | $ 0 | $ 348 |
Derivative liability, net foreign currency forward contract derivatives | (492) | (1,131) |
Not Designated as Hedging Instrument | ||
Foreign Currency Derivatives | ||
Derivative asset, gross forward foreign currency exchange contracts | 3,159 | 345 |
Derivative liability, gross forward foreign currency exchange contracts | (3,626) | (360) |
Designated as Hedging Instrument | ||
Foreign Currency Derivatives | ||
Derivative asset, gross forward foreign currency exchange contracts | 3,164 | 693 |
Derivative asset, netting of counterparty contracts | (3,164) | (345) |
Derivative liability, gross forward foreign currency exchange contracts | (3,656) | (1,476) |
Derivative liability, netting of counterparty contracts | 3,164 | 345 |
Designated as Hedging Instrument | Foreign Exchange Contract | ||
Foreign Currency Derivatives | ||
Derivative asset, gross forward foreign currency exchange contracts | 5 | 348 |
Derivative liability, gross forward foreign currency exchange contracts | $ (30) | $ (1,116) |
DERIVATIVE FINANCIAL INSTRUME_5
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Derivative Financial Instruments Notional Amounts on Outstanding Positions (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives - Fair Value [Line Items] | ||
Notional | $ 165,268 | $ 193,065 |
Fair Value | (492) | (783) |
Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 144,164 | 98,638 |
Fair Value | (467) | (15) |
Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 21,104 | 94,427 |
Fair Value | (25) | (768) |
Singapore Dollar | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 48,296 | 26,760 |
Fair Value | (1,652) | 207 |
Indian Rupee | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 15,517 | 24,945 |
Fair Value | 104 | (10) |
Indian Rupee | Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 3,770 | 7,203 |
Fair Value | (12) | 113 |
South Korean Won | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 16,823 | 18,403 |
Fair Value | 1,094 | (320) |
South Korean Won | Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 2,317 | 12,285 |
Fair Value | (1) | (756) |
British Pound Sterling | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 22,702 | 14,509 |
Fair Value | 1,380 | 128 |
British Pound Sterling | Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 4,874 | 23,025 |
Fair Value | (17) | 235 |
Japanese Yen | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 5,407 | 8,953 |
Fair Value | 370 | 9 |
Euro | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 32,684 | 5,068 |
Fair Value | (1,919) | (29) |
Euro | Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 10,143 | 51,914 |
Fair Value | 5 | (360) |
Other currencies | Not Designated as Hedging Instrument | ||
Derivatives - Fair Value [Line Items] | ||
Notional | 2,735 | 0 |
Fair Value | $ 156 | $ 0 |
DERIVATIVE FINANCIAL INSTRUME_6
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Gain (Losses) from Foreign Currency Transactions and Derivative Contracts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Derivatives - Fair Value [Line Items] | ||||
Foreign currency losses, net | $ (1,770) | $ (393) | $ (1,622) | $ (1,115) |
Not Designated as Hedging Instrument | ||||
Derivatives - Fair Value [Line Items] | ||||
Foreign currency transaction losses | (781) | (2,126) | (1,150) | (6,178) |
Foreign currency forward exchange contracts gains (losses) | (989) | 1,733 | (472) | 5,063 |
Foreign currency losses, net | $ (1,770) | $ (393) | $ (1,622) | $ (1,115) |
BORROWINGS - Schedule of Other
BORROWINGS - Schedule of Other Term Borrowings (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 | Aug. 31, 2021 | Mar. 31, 2021 |
Debt Instrument [Line Items] | ||||
Total face value of long-term borrowings | $ 1,990,000,000 | $ 2,375,000,000 | ||
Unamortized issuance costs | 51,332,000 | 56,973,000 | ||
Current portion of long-term borrowings | 20,000,000 | 24,362,000 | ||
Total long-term borrowings | 1,918,668,000 | 2,298,027,000 | ||
Senior Notes | 2029 Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 350,000,000 | $ 350,000,000 | ||
Stated Interest Rate | 4.25% | 4.25% | ||
Effective Interest Rate | 4.64% | |||
Total face value of long-term borrowings | $ 350,000,000 | 350,000,000 | ||
Senior Notes | 2031 Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 350,000,000 | $ 350,000,000 | ||
Stated Interest Rate | 4.125% | 4.125% | ||
Effective Interest Rate | 4.35% | |||
Total face value of long-term borrowings | $ 350,000,000 | 350,000,000 | ||
Line of Credit | Term Loan B Facility | ||||
Debt Instrument [Line Items] | ||||
Total face value of long-term borrowings | 1,090,000,000 | 1,675,000,000 | ||
Current portion of long-term borrowings | 20,000,000 | 20,000,000 | ||
Line of Credit | Revolving Facility | ||||
Debt Instrument [Line Items] | ||||
Total face value of long-term borrowings | $ 200,000,000 | $ 0 |
BORROWINGS - Credit Facilities
BORROWINGS - Credit Facilities (Details) ¥ in Millions | 1 Months Ended | 9 Months Ended | ||||||
Feb. 17, 2022 USD ($) | Jul. 31, 2019 USD ($) | Sep. 30, 2023 USD ($) facility | Aug. 08, 2023 USD ($) | Jan. 31, 2023 USD ($) | Jan. 31, 2023 CNY (¥) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Revolving Credit Facilities and Bank Borrowings | ||||||||
Total face value of long-term borrowings | $ 1,990,000,000 | $ 2,375,000,000 | ||||||
Number of credit facility | facility | 2 | |||||||
Revolving Facility | Line of Credit | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Total face value of long-term borrowings | $ 200,000,000 | 0 | ||||||
Revolving Facility | Senior Revolving Credit Facility | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Borrowing capacity under revolving credit facility | $ 750,000,000 | |||||||
Additional borrowing under credit agreement | $ 250,000,000 | |||||||
Minimum interest coverage ratio | 3 | |||||||
Minimum borrowing availability for certain acquisitions | $ 40,000,000 | |||||||
Commitments available under credit facility | 750,000,000 | |||||||
Available borrowing capacity | 748,700,000 | $ 548,700,000 | ||||||
Revolving Facility | Senior Revolving Credit Facility | From Quarter Ended March 31, 2022 to Quarter Ended December 31, 2023 | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Maximum leverage coverage ratio | 4 | |||||||
Revolving Facility | Senior Revolving Credit Facility | From Quarter Ended March 31, 2024 | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Maximum leverage coverage ratio | 3.75 | |||||||
Revolving Facility | Senior Revolving Credit Facility | From Quarter Ended June 30, 2024 | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Maximum leverage coverage ratio | 3.50 | |||||||
Revolving Facility | Senior Revolving Credit Facility | From Quarter Ended September 30, 2024 | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Maximum leverage coverage ratio | 3.25 | |||||||
Revolving Facility | Senior Revolving Credit Facility | Federal Funds Open Rate | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 0.25% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Minimum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1.40% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Minimum | Debt Instrument, Redemption, Period One | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1.35% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Maximum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 2.025% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Maximum | Debt Instrument, Redemption, Period One | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1.975% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Base Rate | Minimum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 0.25% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Base Rate | Maximum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 0.875% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Simple Secured Overnight Financing Rate (SOFR) | Minimum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1.35% | |||||||
Revolving Facility | Senior Revolving Credit Facility | Simple Secured Overnight Financing Rate (SOFR) | Maximum | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 1.975% | |||||||
Revolving Facility | CMBC Revolving Credit Facility | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Commitments available under credit facility | $ 1,500,000 | ¥ 10 | ||||||
Outstanding borrowings | 0 | |||||||
Revolving Facility | Asia Pacific Citibank Revolving Credit Facility | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Commitments available under credit facility | 15,000,000 | |||||||
Outstanding borrowings | 0 | 4,300,000 | ||||||
Revolving Facility | Revolving Facility | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Outstanding letters of credit | 1,300,000 | |||||||
Term Loan B Facility | Line of Credit | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Borrowing capacity under revolving credit facility | $ 2,000,000,000 | |||||||
Total face value of long-term borrowings | 1,090,000,000 | 1,675,000,000 | ||||||
Available borrowing capacity | 0 | |||||||
Borrowings outstanding | 5,000,000 | |||||||
Term Loan B Facility | Secured Overnight Financing Rate (SOFR) | Line of Credit | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 3% | |||||||
Term Loan B Facility | Base Rate | Line of Credit | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Margin on variable rate (in percent) | 2% | |||||||
Term Loan B Credit Agreement | Line of Credit | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Borrowing capacity under revolving credit facility | $ 1,180,000,000 | |||||||
Accounts Payable | ||||||||
Revolving Credit Facilities and Bank Borrowings | ||||||||
Interest payable | $ 3,200,000 | $ 10,800,000 |
BORROWINGS - Senior Notes Issua
BORROWINGS - Senior Notes Issuance (Details) - Senior Notes - USD ($) | 1 Months Ended | ||
Aug. 31, 2021 | Mar. 31, 2021 | Sep. 30, 2023 | |
2029 Notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 350,000,000 | $ 350,000,000 | |
Interest rate, stated percentage | 4.25% | 4.25% | |
2029 Notes | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 100% | ||
2029 Notes | Debt Instrument, Redemption, Period Two | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 100% | ||
2029 Notes | Debt Instrument, Redemption, Period Three | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 104.25% | ||
Percentage of principal amount redeemable | 40% | ||
2031 Notes | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount | $ 350,000,000 | $ 350,000,000 | |
Interest rate, stated percentage | 4.125% | 4.125% | |
Guarantor | $ 25,000,000 | ||
2031 Notes | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 100% | ||
2031 Notes | Debt Instrument, Redemption, Period Two | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 100% | ||
2031 Notes | Debt Instrument, Redemption, Period Three | |||
Debt Instrument [Line Items] | |||
Redemption price, percentage | 104.125% | ||
Percentage of principal amount redeemable | 40% |
COMMON STOCK REPURCHASE PROGR_2
COMMON STOCK REPURCHASE PROGRAM (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Class of Stock [Line Items] | ||||
Stock repurchased during period | $ 151,033 | $ 151,033 | ||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Stock repurchased during period (in shares) | 1,391,000 | 0 | 1,391,000 | 0 |
Stock repurchased during period | $ 150,000 | $ 150,000 | ||
Remaining authorization to repurchase common stock | $ 900,000 | $ 900,000 |
REVENUES (Details)
REVENUES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,045,717 | $ 985,094 | $ 3,002,250 | $ 2,609,823 |
Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 515,678 | 535,072 | 1,650,270 | 1,521,259 |
Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 530,039 | 450,022 | 1,351,980 | 1,088,564 |
Crocs Brand | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 798,769 | 715,707 | 2,280,497 | 1,993,148 |
Crocs Brand | Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 369,177 | 353,304 | 1,187,081 | 1,090,073 |
Crocs Brand | Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 429,592 | 362,403 | 1,093,416 | 903,075 |
HEYDUDE Brand | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 246,948 | 269,387 | 721,753 | 616,675 |
HEYDUDE Brand | Wholesale | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 146,501 | 181,768 | 463,189 | 431,186 |
HEYDUDE Brand | Direct-to-consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 100,447 | $ 87,619 | $ 258,564 | $ 185,489 |
INCOME TAXES -Schedule of Incom
INCOME TAXES -Schedule of Income Tax Expense and Effective Tax Rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income before income taxes | $ 233,405 | $ 229,575 | $ 702,413 | $ 542,939 |
Income tax expense | $ 56,380 | $ 60,226 | $ 163,433 | $ 140,515 |
Effective tax rate | 24.20% | 26.20% | 23.30% | 25.90% |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits | $ 218.4 | $ 218.4 | $ 219.4 | ||
Increase in income tax expense | $ 22.9 | ||||
Effective tax rate | 24.20% | 26.20% | 23.30% | 25.90% | |
Decrease in effective income tax rate | 2.60% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||
Net income | $ 177,025 | $ 169,349 | $ 538,980 | $ 402,424 |
Denominator: | ||||
Weighted average common shares outstanding - basic (in shares) | 61,143 | 61,693 | 61,670 | 61,042 |
Plus: Dilutive effect of stock options and unvested restricted stock units (in shares) | 472 | 674 | 610 | 798 |
Weighted average common shares outstanding - diluted (in shares) | 61,615 | 62,367 | 62,280 | 61,840 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 2.90 | $ 2.75 | $ 8.74 | $ 6.59 |
Diluted (in dollars per share) | $ 2.87 | $ 2.72 | $ 8.65 | $ 6.51 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase commitments with third party manufacturers | $ 276.4 |
Estimate of possible loss | 2.7 |
Amount of loss that could potentially exceed amounts accrued | $ 0.7 |
OPERATING SEGMENTS AND GEOGRA_3
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Crocs, Inc | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 4 |
Crocs Brand | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 3 |
OPERATING SEGMENTS AND GEOGRA_4
OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION - Schedule of Information Related to Reportable Operating Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | $ 1,045,717 | $ 985,094 | $ 3,002,250 | $ 2,609,823 |
Income from operations | 273,852 | 264,063 | 827,269 | 630,704 |
Foreign currency losses, net | (1,770) | (393) | (1,622) | (1,115) |
Interest income | 506 | 31 | 1,225 | 219 |
Interest expense | (39,207) | (34,142) | (124,907) | (86,357) |
Other income (expense), net | 24 | 16 | 448 | (512) |
Income before income taxes | 233,405 | 229,575 | 702,413 | 542,939 |
Total consolidated depreciation and amortization | 14,751 | 9,744 | 40,531 | 26,498 |
Total Crocs Brand | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 798,769 | 715,707 | 2,280,497 | 1,993,148 |
HEYDUDE Brand | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 246,948 | 269,387 | 721,753 | 616,675 |
Reportable Operating Segments | Total Crocs Brand | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 798,769 | 715,707 | 2,280,497 | 1,993,148 |
Income from operations | 297,456 | 235,334 | 833,145 | 653,191 |
Total consolidated depreciation and amortization | 8,692 | 4,123 | 23,228 | 11,737 |
Reportable Operating Segments | North America | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 480,744 | 445,327 | 1,306,609 | 1,187,713 |
Income from operations | 218,018 | 191,438 | 560,358 | 498,413 |
Total consolidated depreciation and amortization | 6,394 | 2,705 | 15,179 | 7,514 |
Reportable Operating Segments | Asia Pacific | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 175,199 | 138,450 | 513,459 | 383,187 |
Income from operations | 69,762 | 40,286 | 203,203 | 121,823 |
Total consolidated depreciation and amortization | 696 | 508 | 1,995 | 1,528 |
Reportable Operating Segments | EMEALA | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 142,826 | 131,929 | 460,429 | 422,226 |
Income from operations | 49,939 | 40,506 | 176,844 | 128,819 |
Total consolidated depreciation and amortization | 1,416 | 746 | 3,997 | 2,166 |
Reportable Operating Segments | HEYDUDE Brand | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 246,948 | 269,387 | 721,753 | 616,675 |
Income from operations | 31,776 | 79,056 | 173,905 | 136,381 |
Total consolidated depreciation and amortization | 3,919 | 3,500 | 10,987 | 8,750 |
Brand corporate | Brand corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total consolidated revenues | 0 | 1 | 0 | 22 |
Income from operations | (40,263) | (36,896) | (107,260) | (95,864) |
Total consolidated depreciation and amortization | 186 | 164 | 2,057 | 529 |
Enterprise corporate | ||||
Segment Reporting Information [Line Items] | ||||
Income from operations | (55,380) | (50,327) | (179,781) | (158,868) |
Total consolidated depreciation and amortization | $ 2,140 | $ 2,121 | $ 6,316 | $ 6,011 |
ACQUISITION OF HEYDUDE - Narrat
ACQUISITION OF HEYDUDE - Narrative (Details) - USD ($) | 3 Months Ended | 7 Months Ended | 9 Months Ended | |||
Feb. 17, 2022 | Mar. 31, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 711,885,000 | $ 714,814,000 | ||||
Escrow Amount | ||||||
Business Acquisition [Line Items] | ||||||
Escrow deposit | $ 125,000,000 | |||||
Adjustment Holdback Amount | ||||||
Business Acquisition [Line Items] | ||||||
Escrow deposit | 8,500,000 | |||||
Term Loan B Facility | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Borrowing capacity under revolving credit facility | $ 2,000,000,000 | |||||
HEYDUDE | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of voting interests acquired | 100% | |||||
Consideration transferred | $ 2,300,000,000 | |||||
Cash consideration | $ 2,050,000,000 | |||||
Equity interest issued (in shares) | 2,852,280 | |||||
Revenue of acquiree since acquisition date, actual | $ 616,700,000 | |||||
Income from acquiree | $ 136,400,000 | |||||
Goodwill | $ 710,034,000 | 710,000,000 | ||||
Goodwill valuation adjustment | $ 3,300,000 | |||||
Goodwill deductible for income tax purposes | 0 | |||||
Acquisition-related costs | $ 0 | $ 20,600,000 | ||||
HEYDUDE | Term Loan B Facility | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Borrowing capacity under revolving credit facility | 2,000,000,000 | |||||
HEYDUDE | Revolving Facility | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Borrowing capacity under revolving credit facility | $ 50,000,000 |
ACQUISITION OF HEYDUDE - Schedu
ACQUISITION OF HEYDUDE - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Feb. 17, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 711,885 | $ 714,814 | |
HEYDUDE | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 6,232 | ||
Accounts receivable, net | 68,698 | ||
Inventories | 155,773 | ||
Prepaid expenses and other assets | 7,880 | ||
Intangible assets | 1,780,000 | ||
Goodwill | $ 710,000 | 710,034 | |
Right-of-use assets | 2,844 | ||
Accounts payable | (30,017) | ||
Accrued expenses and other liabilities | (18,860) | ||
Income taxes payable | (30,572) | ||
Long-term deferred tax liability | (312,656) | ||
Long-term income taxes payable | (13,004) | ||
Operating lease liabilities | (2,843) | ||
Net assets acquired | $ 2,323,509 |
ACQUISITION OF HEYDUDE - Sche_2
ACQUISITION OF HEYDUDE - Schedule of Intangible Assets Acquired in Connection with the Acquisition (Details) - HEYDUDE $ in Thousands | Feb. 17, 2022 USD ($) |
Business Acquisition [Line Items] | |
Total intangible assets | $ 1,780,000 |
Trademark | |
Business Acquisition [Line Items] | |
Indefinite-lived intangible assets acquired | $ 1,570,000 |
Customer relationships | |
Business Acquisition [Line Items] | |
Weighted-Average Useful Life | 15 years |
Finite-lived intangible assets acquired | $ 210,000 |
ACQUISITION OF HEYDUDE - Sche_3
ACQUISITION OF HEYDUDE - Schedule of Proforma Information (Details) - HEYDUDE - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Revenues | $ 985,094 | $ 2,700,129 |
Net income | $ 169,349 | $ 472,071 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 341,760 | $ 278,665 |
Less: Accumulated depreciation and amortization | (118,699) | (97,136) |
Property and equipment, net | 223,061 | 181,529 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 161,627 | 146,821 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 92,825 | 76,363 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 54,931 | 28,699 |
Furniture, fixtures, and other | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 32,377 | $ 26,782 |