CROX notes:

2005 annual report

• Sell through 1,500 intl retail stores as of 2005 annual report

• 50 retail kiosks

• uses expeditors intl for distribution services – but no long term contract and company building its own infrastructure too.

• Able to get raw material from more than one supplier but still looking for alternative suppliers to diversify and get better pricing power.

• Operate own manufacturing facilities as well as using 3^rd party facilities. Trying to increase manufacturing on their own to better manage risk of 3^rd party not delivering.

• Developing additional 3^rd party manufacturers to diversify product stream.

• Only small percent of employees (in Canada) represented by union

• Footwear 94.4% of revenue in 2005

• Spending 4.5mm from IPO to upgrade financial reporting systems and IS system

• Some risk that the major 3^rd party manufacturer (70.3% of 2005 footwear) could quit producing or renegotiate to unfavorable terms.

• 10 largest retail customers account for 34% of rev (dillards largest at 12%)

Questions for 2006:

• Has the company been able to increase manufacturing capacity (using mexico property?)

Q3 Earnings release and conf call (12/31/07)

• Revenue $256.3m up 130%, EPS $0.66 up 144%

• Guidance of $820-830m sales and EPS of $1.94-1.98 in 2007

  • Growth targets of 35-40% for 2008 – weighted towards the first half

• Opened a distribution facility in Europe with 320,000 sq ft

• Finished with $195.3m in inventory and $76.6m in cash

• Consumer demand continues to be strong with highlights in Europe and Japan

• Now has 14 manufacturing facilities including 5 third party operators in China

  • Currently producing 6.8m pairs per month with ability to ramp to 7.8m

• Added 500 domestic doors for a total of 12,500 – ended with 16,000 doors internationally.

• Continuing to see strength in license products – significantly increased Disney line

• For the first time, international revenues accounted for more than half of total – Canada/Mexico $11.4m – Europe $58.1m – Asia $53.9m

  • (Currency rate becomes much more of an issue with a majority of revenue non-dollar)

• Move to larger distribution center in the Netherlands disrupted $20m worth of shipments

• Colder weather sparking seasonally weak fall sales across Europe and Japan

• Brazil and China are newest markets with expectations of bringing India online soon

• Jabbitz now has 1,200 SKUs

• Introduction of “ocean minded” sandals and limited line of apparel which will be available in 1H 2008

  • Will also introduce biking and golf footwear with coslite material

• Company building inventory aggressively after failing to meet International demand in 1H 2007

• Will roll into most of Foot Locker’s doors (several thousand) over first half 2008

• Some analyst concern that the company is no longer able to ramp production quickly to meet demand as global growth reduces flexibility

  • Now have 90 different footwear products – tough to model demand and have correct amount of each product available

• Expense levels will be a bit higher in Q4 as company ramps for strong spring in emerging markets.

Baird Report 11/1/07

• Believes distribution center issues overshadowed by strong demand

• Expecting 15-20% domestic door growth and 30-40% international door growth

• Raising estimate to $2.77 (in line with high end of management guidance)

• Knock-off product hitting the market and while CROX filing complaints this could continue to be a challenge.

EPS Report and conf call 2/19/08

-          Q4 revenue $224.8m up 99%, EPS 0.45 versus 0.26 (up 73%

-          2007 Revenue $847.4m up 139%, EPS $2.00 up 146.9%

-          For the quarter, domestic sales were up 47% and international sales up 221% - nearly even mix

-          Q4 gross margins 56% versus 57.7% last year – demand higher than expected so air shipping was used which hurt margins

-          Acquired and developed other businesses and diversified into additional categories for future growth

-          Re-affirming sales guidance for 2008 of $1.16B and EPS of $2.70

-          Cash balance much lower than might be expected – large inventories ahead of spring season and also high accounts receivables (difficulty in collections or just high sales volumes?)

-          Now sell in 90 countries with 19,000 doors up 11,000 this year – expect to grow doors significantly in 2008

-          Ended 2007 with over 250 styles  - continue to see demand for core products even while adding new ones

-          Opened first four full price Crocs stores in Santa Monica, New York, Boston and Maui – also opened 6 additional outlet stores – expect to have a total of 20 outlet stores by year end

-          Purchased Bite Footwear in August to add to Ocean Minded and Jibbitz acquisitions.

-          Crocs golf shoe will be on shelves this spring – also addressing medical footwear and chef footwear

-          Over 2007, increased global production capacity by 80% to approx 7.2m pairs of shoes per month

-          Europe and Japan should have access to full range of products while newer markets like the Baltics and Russia will start with traditional core products

-          International sales should eclipse US sales in first half 2008

-          Some analysts concerned about high inventory levels and management’s ability to control inventory

EPS pre-release and conf call 4/15/08

-          Expects Q1 revenue to be $195-200m with loss per share of <0.05> to 0.00 below previous revenue guidance of $225m and earnings of 0.46.

-          Domestic sales for Q1 likely up 13%, European up 90% and Asia up 75%

-          Decided to shut down Canadian manufacturing plant which accounts for a one time loss of 0.13 per share

o        So ex-item earnings of 0.08 to 0.13 still well below guidance

-          Inventory levels as of 3/31 to rise 5-10% from 12/31 levels

o        Recall inventory levels caused major concerns after 12/31 report

-          Q2 revenue to grow 10-15% y/y with EPS of 0.42 to 0.47 (0.45-0.50 ex plant shutdown costs)

-          FY 2008 revenue 15-20% above 2007 and EPS (ex items) of 1.70-1.80

-          Authorized repurchase of 5 million additional shares

-          Retail environment in US increasingly challenging

-          Experienced deceleration toward march end compared to typical uptick in past years at 1Q end

-          Inventories should decrease slightly in Q2 and continue to decline in Q3

-          Expect to save 5-6 million in costs per quarter by taking Canadian factory down

-          Management reserved about how much manufacturing was done in Q1 – did sell some product to discount channels such as TJ Max

 

Wedbush Morgan report 4/15

-          Believe weak revenue represents more than macro economic weakness and could point to reduction in retailer demand for product

-          Company declined to comment on previously provided long-term growth projection of 20-30% - should update on Q1 earnings call.