Crocs Inc

Previous wording

•We continue to operate in an environment where consumers are feeling the effects of elevated interest rates and inflation, and as a result, they are spending more cautiously. In addition, geopolitical tensions remain across the globe. We remain focused on making the right decisions for the health of our brands, maintaining tight inventory control, and investing in strategic initiatives to support durable long-term growth.

Current wording

•We continue to operate in an environment where consumers are feeling the effects of elevated interest rates and inflation, and as a result, they are spending more cautiously. In addition, geopolitical tensions have increased across the globe. We remain focused on making the right decisions for the health of our brands, maintaining tight inventory control, and investing in strategic initiatives to support durable long-term growth.

Previous wording

•We continue to invest in our strategic pillars, including marketing globally for both brands, China and sandal market penetration for the Crocs Brand, product innovation, and various initiatives supporting our global digital business. Specific to the HEYDUDE Brand, we remain focused on our strategy of investing in marketing, including expected acceleration in our investment in the second half of 2024, maintaining price integrity, and improving channel inventories.

Current wording

•We continue to invest in our strategic pillars, including marketing globally for both brands, China and sandal market penetration for the Crocs Brand, product innovation, and various initiatives supporting our global digital business. Specific to the HEYDUDE Brand, we are focused on building a consistent and profitable growth brand. We continue to invest in marketing and talent in order to increase awareness and relevance.

Previous wording

•Our liquidity position remains strong with approximately $167.7 million in cash and cash equivalents and $573.7 million in available borrowing capacity as of June 30, 2024. Our total borrowings were $1.53 billion as of June 30, 2024. We resumed our share repurchase program in May 2024, repurchasing $175.0 million of our common stock during the quarter.

Current wording

•Our liquidity position remains strong with approximately $186.1 million in cash and cash equivalents and $574.2 million in available borrowing capacity as of September 30, 2024. Our total borrowings were $1.42 billion as of September 30, 2024. We repurchased $151.2 million of our common stock during the quarter.

Previous wording

Second Quarter 2024 Financial and Operational Highlights

Current wording

Third Quarter 2024 Financial and Operational Highlights

Previous wording

Revenues were $1,111.5 million for the second quarter of 2024, a 3.6% increase compared to the second quarter of 2023. The increase was due to the net effects of: (i) higher average selling price on a constant currency basis (“ASP”), which increased revenues by $59.5 million, or 5.5%; (ii) lower unit sales volume in the HEYDUDE Brand, partially offset by higher unit sales volume in the Crocs Brand, which resulted in a net decrease in revenues of $7.5 million, or 0.7%; and (iii) net unfavorable changes in exchange rates, which decreased revenues by $12.8 million, or 1.2%.

Current wording

Revenues were $1,062.2 million for the third quarter of 2024, a 1.6% increase compared to the third quarter of 2023. The increase was due to the net effects of: (i) higher unit sales volume in the Crocs Brand, partially offset by lower unit sales volume in the HEYDUDE Brand, which resulted in a net increase in revenues of $33.1 million, or 3.2%; (ii) lower average selling price on a constant currency basis (“ASP”) in the Crocs Brand, partially offset by higher ASP in the HEYDUDE Brand, which decreased revenues by $12.9 million, or 1.2%; and (iii) net unfavorable changes in exchange rates, which decreased revenues by $3.7 million, or 0.4%.

Previous wording

•We grew revenues in the Crocs Brand by 9.7% compared to the same period in 2023.

Current wording

•We grew revenues in the Crocs Brand by 7.4% compared to the same period in 2023.

Previous wording

•Selling, general and administrative expenses (“SG&A”) were $356.2 million compared to $302.8 million in the second quarter of 2023, as a result of increased investment in talent and marketing. As a percent of revenues, SG&A increased to 32.0% of revenues compared to 28.2% of revenues in the second quarter of 2023.

Current wording

•Selling, general and administrative expenses (“SG&A”) were $363.5 million compared to $307.8 million in the third quarter of 2023, as a result of continued increased investment in talent and marketing. As a percent of revenues, SG&A increased to 34.2% of revenues compared to 29.4% of revenues in the third quarter of 2023.

Previous wording

•Income from operations increased to $325.7 million from $318.5 million in last year’s second quarter. Net income was $228.9 million, or $3.77 per diluted share, compared to $212.4 million, or $3.39 per diluted share, in last year’s second quarter.

Current wording

•Income from operations decreased to $269.8 million from $273.9 million in last year’s third quarter. Net income was $199.8 million, or $3.36 per diluted share, compared to $177.0 million, or $2.87 per diluted share, in last year’s third quarter.

Previous wording

Revenues. In the three months ended June 30, 2024, revenues increased compared to the same period in 2023, driven by Crocs Brand international revenues, particularly in China. Overall, revenues increased $59.5 million, or 5.5%, from higher ASP, driven mostly by increased pricing, less discounting, and favorable channel mix in both brands and favorable product mix in the Crocs Brand. This was offset in part by lower volume of $7.5 million, or 0.7%, as a result of lower HEYDUDE Brand volumes, mostly offset by higher Crocs Brand volumes. Net unfavorable foreign currency fluctuations of $12.8 million, or 1.2%, primarily in the Korean Won, Chinese Yuan, and Japanese Yen, also decreased revenues.

Current wording

Revenues also increased in the nine months ended September 30, 2024, primarily due to higher ASP of $144.9 million, or 4.8%, driven by increased pricing and favorable channel mix in both brands, favorable product mix in the Crocs Brand, and less discounting in the HEYDUDE Brand. This was offset in part by net unfavorable foreign currency fluctuations of $23.1 million, or 0.8%, primarily in the Korean Won, Chinese Yuan, and Japanese Yen. Lower volume of $11.7 million, or 0.4%, as a result of lower HEYDUDE Brand volumes, partially offset by higher Crocs Brand volumes, also decreased the overall increase in revenues.

Previous wording

Gross margin. Gross margin increased in the three months ended June 30, 2024 to 61.4% compared to 57.9% in the same period in 2023. This was primarily driven by lower product costs in both brands of approximately 90 basis points, lower freight costs for both brands of approximately 80 basis points, and favorable brand mix of 60 basis points.

Current wording

Gross margin. Gross margin increased in the three months ended September 30, 2024 to 59.6% compared to 55.6% in the same period in 2023. This was primarily driven by prior year distribution costs of approximately 180 basis points associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada that did not recur in the current year, lower product costs of 70 basis points, favorable brand mix of 70 basis points, and lower freight costs of 40 basis points.

Previous wording

Gross margin in the six months ended June 30, 2024 was 58.7% compared to 56.1% in 2023. This was primarily driven by lower freight costs in both brands of approximately 110 basis points, lower product costs for both brands of approximately 50 basis points, and favorable brand mix of 60 basis points.

Current wording

Gross margin in the nine months ended September 30, 2024 was 59.0% compared to 55.9% in 2023. This was primarily driven by lower freight costs in both brands of approximately 100 basis points, prior year distribution costs of approximately 80 basis points associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada that did not recur in the current year, favorable brand mix of 70 basis points, and lower product costs of 50 basis points.

Previous wording

Selling, general and administrative expenses. SG&A increased $53.4 million, or 17.6%, in the three months ended June 30, 2024 compared to the same period in 2023. This increase was primarily driven by increased investments in talent and marketing of $20.8 million and $18.0 million, respectively.

Current wording

Selling, general and administrative expenses. SG&A increased $55.7 million, or 18.1%, in the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily driven by increased investments in talent and marketing of $17.9 million and $14.4 million, respectively. Additionally, there were various other net cost increases, including incremental costs in our DTC channel, of $23.4 million.

Previous wording

SG&A expenses increased $107.6 million, or 19.8%, during the six months ended June 30, 2024 compared to the same period in 2023, driven by increased investments in talent and marketing of $37.2 million and $26.5 million, respectively. This increase was also due to an $18.2 million impairment charge for information technology systems related to the HEYDUDE integration and impairment charges of $5.9 million related to our former warehouses in Las Vegas, Nevada and the Netherlands. Additionally, facilities costs increased $8.8 million and depreciation and amortization expense increased $6.7 million. Other net costs increased SG&A by $4.3 million.

Current wording

SG&A expenses increased $163.3 million, or 19.2%, during the nine months ended September 30, 2024 compared to the same period in 2023, driven by increased investments in talent and marketing of $55.1 million and $40.9 million, respectively, as well as incremental costs in our DTC channel of $27.2 million. The increase in SG&A expenses was also due to an $18.2 million impairment charge for information technology systems related to the HEYDUDE integration and impairment charges of $5.9 million related to our former warehouses in Las Vegas, Nevada and the Netherlands. Other net costs increased SG&A by $16.0 million.

Previous wording

Foreign currency gains (losses), net. Foreign currency gains (losses), net, consist of realized and unrealized foreign currency gains and losses from the remeasurement and settlement of monetary assets and liabilities denominated in non-functional currencies as well as realized and unrealized gains and losses on foreign currency derivative instruments. During the three months ended June 30, 2024, we recognized realized and unrealized net foreign currency losses of $1.3 million compared to gains of $0.6 million during the three months ended June 30, 2023.

Current wording

Foreign currency losses, net. Foreign currency losses, net, consist of realized and unrealized foreign currency gains and losses from the remeasurement and settlement of monetary assets and liabilities denominated in non-functional currencies as well as realized and unrealized gains and losses on foreign currency derivative instruments. During the three months ended September 30, 2024, we recognized realized and unrealized net foreign currency losses of $0.3 million compared to losses of $1.8 million during the three months ended September 30, 2023.

Previous wording

During the six months ended June 30, 2024, we recognized realized and unrealized net foreign currency losses of $3.6 million compared to gains of $0.1 million during the six months ended June 30, 2023.

Current wording

During the nine months ended September 30, 2024, we recognized realized and unrealized net foreign currency losses of $3.9 million compared to losses of $1.6 million during the nine months ended September 30, 2023.

Previous wording

Interest expense. Interest expense during the three months ended June 30, 2024 decreased $13.9 million, or 32.3%, compared to the three months ended June 30, 2023. Interest expense during the six months ended June 30, 2024 decreased $26.0 million, or 30.3%, compared to the six months ended June 30, 2023. The decrease in interest expense for both the three and six months ended June 30, 2024 was due to lower outstanding borrowings and lower weighted average interest rates on the Term Loan B Facility (as defined herein) in the current year.

Current wording

Interest expense. Interest expense during the three months ended September 30, 2024 decreased $13.0 million, or 33.2%, compared to the three months ended September 30, 2023. Interest expense during the nine months ended September 30, 2024 decreased $39.0 million, or 31.2%, compared to the nine months ended September 30, 2023. The decrease in interest expense for both the three and nine months ended September 30, 2024 was due to lower outstanding borrowings and lower weighted average interest rates on the Term Loan B Facility (as defined herein) in the current year.

Previous wording

Income tax expense. During the three months ended June 30, 2024, income tax expense increased $2.7 million compared to the same period in 2023. The effective tax rate for the three months ended June 30, 2024 was 22.8% compared to an effective tax rate of 23.4% for the same period in 2023, a 0.6% 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.

Current wording

Income tax expense. During the three months ended September 30, 2024, income tax expense decreased $11.3 million compared to the same period in 2023. The effective tax rate for the three months ended September 30, 2024 was 18.4% compared to an effective tax rate of 24.2% for the same period in 2023, a 5.8% 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.

Previous wording

During the six months ended June 30, 2024, income tax expense increased $2.0 million compared to the same period in 2023. The effective tax rate for the six months ended June 30, 2024 was 22.2% compared to an effective tax rate of 22.8% for the same period in 2023, a 0.6% decrease. This decrease in the effective 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 primarily due to differences in income tax rates between U.S. and foreign jurisdictions.

Current wording

During the nine months ended September 30, 2024, income tax expense decreased $9.2 million compared to the same period in 2023. The effective tax rate for the nine months ended September 30, 2024 was 21.0% compared to an effective tax rate of 23.3% for the same period in 2023, a 2.3% decrease. This decrease in the effective 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 primarily due to differences in income tax rates between U.S. and foreign jurisdictions.

Previous wording

(2) Our business has continued to evolve in the period following the consummation of the HEYDUDE acquisition, as we have grown the brand and staffed and developed our leadership team at HEYDUDE. In the fourth quarter of 2023, to reflect changes in the way management evaluates performance, makes operating decisions, and allocates resources, we updated our reportable operating segments to be (i) Crocs Brand and (ii) HEYDUDE Brand. Our ‘North America,’ ‘Asia Pacific,’ and ‘EMEALA’ segments as well as revenues and expenses related to Crocs ‘Brand corporate’ have been consolidated to the ‘Crocs Brand.’ As a result of these changes, the previously reported amounts for revenues and income from operations for the three and six months ended June 30, 2023 have been recast to conform to current period presentation.

Current wording

(2) Our business has continued to evolve in the period following the consummation of the HEYDUDE acquisition, as we have grown the brand and staffed and developed our leadership team at HEYDUDE. In the fourth quarter of 2023, to reflect changes in the way management evaluates performance, makes operating decisions, and allocates resources, we updated our reportable operating segments to be (i) Crocs Brand and (ii) HEYDUDE Brand. Our ‘North America,’ ‘Asia Pacific,’ and ‘EMEALA’ segments as well as revenues and expenses related to Crocs ‘Brand corporate’ have been consolidated to the ‘Crocs Brand.’ As a result of these changes, the previously reported amounts for revenues and income from operations for the three and nine months ended September 30, 2023 have been recast to conform to current period presentation.

Previous wording

Revenues. Crocs Brand revenues increased in the three months ended June 30, 2024 compared to the same period in 2023. This increase was due in part to higher ASP, primarily as a result of price increases in international markets, favorable channel mix and product mix, and less discounting than the prior year. Higher volume in both channels also drove the increase in revenues while net unfavorable foreign currency fluctuations partially offset the overall increase to revenues.

Current wording

Revenues. Crocs Brand revenues increased in the three months ended September 30, 2024 compared to the same period in 2023, primarily due to higher volume. The overall increase was partially offset by lower ASP, driven by unfavorable product mix and slight net price decreases.

Previous wording

The increase in Crocs Brand revenues in the six months ended June 30, 2024 compared to the same period in 2023 is primarily due to higher ASP, due to favorable product mix, less discounting, favorable channel mix, and price increases in international markets, and increased volume. Partially offsetting these increases was unfavorable foreign currency fluctuations.

Current wording

The increase in Crocs Brand revenues in the nine months ended September 30, 2024 compared to the same period in 2023 is primarily due to higher volume and higher ASP, due to favorable product mix, price increases in international markets, and favorable channel mix.

Previous wording

Income from Operations. Income from operations for our Crocs Brand segment was $355.5 million for the three months ended June 30, 2024, an increase of $37.8 million, or 11.9%, compared to the same period in 2023. Gross margin was 64.1%, an increase of 230 basis points compared to prior year, driven primarily by lower product costs, favorable duties as a result of shifts in country mix, and lower freight costs.

Current wording

Income from Operations. Income from operations for our Crocs Brand segment was $313.3 million for the three months ended September 30, 2024, an increase of $15.8 million, or 5.3%, compared to the same period in 2023. Gross margin was 62.5%, an increase of 60 basis points compared to prior year, driven primarily by lower product costs and lower freight and fulfillment costs. The overall increase was partially offset by unfavorable channel mix.

Previous wording

SG&A for our Crocs Brand segment increased $33.1 million, or 16.8%, during the three months ended June 30, 2024 compared to the same period in 2023. This increase was primarily due to higher marketing costs and higher variable expenses related to higher revenues in the DTC channel.

Current wording

SG&A for our Crocs Brand segment increased $25.7 million, or 13.0%, during the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily due to increased investments in talent and marketing.

Previous wording

During the six months ended June 30, 2024, income from operations for our Crocs Brand was $619.7 million, an increase of $84.0 million, or 15.7%, compared to the same period in 2023. Gross margin was 61.4%, an increase of 220 basis points, primarily due to favorable customer mix, which was largely driven by the termination of our relationship with a significant distributor in the second quarter of 2023 following evidence that it was selling goods outside of its approved territories, price increases in international markets, and lower freight costs. The overall increase in gross margin was partially offset by higher royalty expense as we continue to expand into licensed product.

Current wording

During the nine months ended September 30, 2024, income from operations for our Crocs Brand was $932.9 million, an increase of $99.8 million, or 12.0%, compared to the same period in 2023. Gross margin was 61.8%, an increase of 160 basis points, primarily due to lower product costs, lower freight costs, and price increases in international markets. The overall increase was partially offset by unfavorable channel mix.

Previous wording

SG&A for our Crocs Brand increased $57 million, or 16.8%, during the six months ended June 30, 2024 compared to the same period in 2023, primarily due to higher marketing costs and higher variable expenses related to higher revenues in the DTC channel.

Current wording

SG&A for our Crocs Brand increased $83.0 million, or 15.4%, during the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to increased investments in marketing and talent, increased facilities costs as we expand our retail footprint, increased depreciation and amortization expense, and higher variable expenses related to higher revenues in the DTC channel.

Previous wording

Revenues. For the three months ended June 30, 2024, revenues decreased compared to 2023. This decrease was primarily due to lower volume in both channels. Higher ASP, primarily due to increased pricing, favorable channel mix as we grow our retail business, and less discounting, partially offset the overall decrease to revenues.

Current wording

Revenues. For the three months ended September 30, 2024, revenues decreased compared to 2023, primarily due to lower volume. Higher ASP, primarily due to less discounting and increased pricing as well as favorable channel mix as we grow our retail business, partially offset the overall decrease to revenues.

Previous wording

During the six months ended June 30, 2024, revenues decreased compared to the same period in 2023, primarily due to lower volume. Higher ASPs, driven by increased pricing, favorable channel mix, and less discounting, partially offset this decrease.

Current wording

During the nine months ended September 30, 2024, revenues decreased compared to the same period in 2023, primarily due to lower volume. Higher ASPs, driven by less discounting and increased pricing, favorable channel mix, and product mix, partially offset this decrease.

Previous wording

Income from Operations. Income from operations for the HEYDUDE segment was $42.4 million for the three months ended June 30, 2024, a decrease of $23.1 million, or 35.3%, compared to 2023. Gross margin was 49.1%, an increase of 200 basis points, primarily due to lower freight costs, favorable channel mix, and increased pricing. This was offset in part by transition costs and infrastructure investments associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada in the current year, as well as unfavorable product mix.

Current wording

Income from Operations. Income from operations for the HEYDUDE segment was $26.2 million for the three months ended September 30, 2024, a decrease of $5.6 million, or 17.6%, compared to 2023. Gross margin was 47.9%, an increase of 1,230 basis points, primarily due to lower freight costs, favorable channel mix, and higher ASP, as described above. Additionally, there were prior year distribution costs associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada that did not recur in the current year, offset in part by infrastructure investments incurred in the current year associated with the move.

Previous wording

SG&A for the HEYDUDE Brand segment increased $7.4 million, or 15.7%, during the three months ended June 30, 2024 compared to the same period in 2023. This increase was primarily due to an increased investment in talent.

Current wording

SG&A for the HEYDUDE Brand segment increased $15.4 million, or 27.5%, during the three months ended September 30, 2024 compared to the same period in 2023. This increase was primarily due to an increased investment in marketing and talent.

Previous wording

Income from operations for the HEYDUDE segment was $82.5 million for the six months ended June 30, 2024, a decrease of $59.6 million, or 41.9%, compared to the same period in 2023. Gross margin was 47.6%, a decrease of 70 basis points basis points, driven in part by transition costs and infrastructure investments associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada in the current year, offset in part by lower freight costs.

Current wording

Income from operations for the HEYDUDE segment was $108.7 million for the nine months ended September 30, 2024, a decrease of $65.2 million, or 37.5%, compared to the same period in 2023. Gross margin was 47.7%, an increase of 380 basis points, driven in part by higher ASP, as discussed above, lower freight costs, and favorable channel mix. Additionally, there were prior year distribution costs associated with the move to our new HEYDUDE distribution center in Las Vegas, Nevada that did not recur in the current year, offset in part by transition costs and infrastructure investments incurred in the current year associated with the move.

Previous wording

SG&A for the HEYDUDE Brand segment increased $17.2 million, or 19.7%, during the six months ended June 30, 2024 compared to the same period in 2023. This is primarily due to an increased in investment talent and impairment costs of the right-of-use assets for our former HEYDUDE Brand warehouses in Las Vegas, Nevada in the current year.

Current wording

SG&A for the HEYDUDE Brand segment increased $32.6 million, or 22.8%, during the nine months ended September 30, 2024 compared to the same period in 2023. This is primarily due to an increase in investment talent and marketing, impairment costs of the right-of-use assets for our former HEYDUDE Brand warehouses in Las Vegas, Nevada in the current year, and increased facilities costs as we grow our retail business. The overall increase was partially offset by lower variable expenses related to lower revenues in the DTC channel.

Previous wording

During the three months ended June 30, 2024, total net costs within ‘Enterprise corporate’ increased $7.5 million, or 11.5%, compared to the same period in 2023. This increase was primarily due to an increased investment in talent.

Current wording

During the three months ended September 30, 2024, total net costs within ‘Enterprise corporate’ increased $14.2 million, or 25.7%, compared to the same period in 2023. This increase was in part due to an increased investment in talent.

Previous wording

During the six months ended June 30, 2024, total net costs within ‘Enterprise corporate’ increased $25.6 million, or 20.6%, compared to the same period in 2023. This was primarily due to an impairment charge for information technology systems related to the HEYDUDE integration and an increased investment in talent.

Current wording

During the nine months ended September 30, 2024, total net costs within ‘Enterprise corporate’ increased $39.8 million, or 22.2%, compared to the same period in 2023. This was primarily due to an increased investment in talent, an impairment charge for information technology systems related to the HEYDUDE integration, higher depreciation and amortization expense, and higher information technology costs.

Previous wording

As of June 30, 2024, we had 363 company-operated retail locations for the Crocs Brand, inclusive of 172 retail locations in North America and 191 retail locations internationally. As of June 30, 2024, we had 32 company-operated retail locations for the HEYDUDE Brand, inclusive of 9 temporary clearance stores. As of June 30, 2023, we had 346 company-operated retail locations for the Crocs Brand, inclusive of 175 retail locations in North America and 171 retail locations internationally. As of June 30, 2023, we had 9 company-operated retail locations for the HEYDUDE Brand, all of which were temporary clearance stores.

Current wording

As of September 30, 2024, we had 372 company-operated retail locations for the Crocs Brand, inclusive of 173 retail locations in North America and 199 retail locations internationally. The Crocs Brand store count includes 9 temporary clearance stores. As of September 30, 2024, we had 43 company-operated retail locations for the HEYDUDE Brand, inclusive of 9 temporary clearance stores. As of September 30, 2023, we had 347 company-operated retail locations for the Crocs Brand, inclusive of 173 retail locations in North America and 174 retail locations internationally. As of September 30, 2023, we had 11 company-operated retail locations for the HEYDUDE Brand, all of which were temporary clearance stores.

Previous wording

As of June 30, 2024, we had $167.7 million in cash and cash equivalents and up to $573.7 million of available borrowings, including $558.7 million of remaining borrowing availability under the Revolving Facility (as defined below) and $15.0 million of remaining borrowing availability under the Citibank Facility (as defined below). As of June 30, 2024, the Term Loan B Facility (as defined below) was fully drawn and there was no available borrowing capacity. We believe that cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months. In May 2024, we resumed our share repurchase program.

Current wording

As of September 30, 2024, we had $186.1 million in cash and cash equivalents and up to $574.2 million of available borrowings, including $559.2 million of remaining borrowing availability under the Revolving Facility (as defined below) and $15.0 million of remaining borrowing availability under the Citibank Facility (as defined below). As of September 30, 2024, the Term Loan B Facility (as defined below) was fully drawn and there was no available borrowing capacity. We believe that cash flows from operations, our cash and cash equivalents on hand, and available borrowings under our Revolving Facility will be sufficient to meet our ongoing liquidity needs and capital expenditure requirements for at least the next twelve months.

Previous wording

All of the cash held outside of the U.S. could be repatriated to the U.S. as of June 30, 2024 without incurring additional U.S. federal income taxes. In some countries, repatriation of certain foreign balances is restricted by local laws. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of June 30, 2024, we held $112.6 million of our total $167.7 million in cash in international locations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $112.6 million, $2.8 million could potentially be restricted by local laws.

Current wording

All of the cash held outside of the U.S. could be repatriated to the U.S. as of September 30, 2024 without incurring additional U.S. federal income taxes. In some countries, repatriation of certain foreign balances is restricted by local laws. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and could adversely affect our liquidity. As of September 30, 2024, we held $132.6 million of our total $186.1 million in cash in international locations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $132.6 million, $2.4 million could potentially be restricted by local laws.

Previous wording

The Credit Agreement requires or required, as applicable, 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 ended December 31, 2023, (ii) 3.75 to 1.00 for the quarter ended March 31, 2024, (iii) 3.50 to 1.00 for the quarter ended 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 June 30, 2024, we were in compliance with all financial covenants under the Credit Agreement.

Current wording

The Credit Agreement requires or required, as applicable, 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 ended December 31, 2023, (ii) 3.75 to 1.00 for the quarter ended March 31, 2024, (iii) 3.50 to 1.00 for the quarter ended June 30, 2024, and (iv) 3.25 to 1.00 for the quarter ended 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, 2024, we were in compliance with all financial covenants under the Credit Agreement.

Previous wording

As of June 30, 2024, the total commitments available from the lenders under the Revolving Facility were $750.0 million. At June 30, 2024, we had $190.0 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 June 30, 2024 and December 31, 2023, we had $558.7 million of available borrowing capacity under the Revolving Facility, which matures in November 2027.

Current wording

As of September 30, 2024, the total commitments available from the lenders under the Revolving Facility were $750.0 million. At September 30, 2024, we had $190.0 million in outstanding borrowings and $0.8 million in outstanding letters of credit under the Revolving Facility, which reduces amounts available for borrowing under the Revolving Facility. As of September 30, 2024 and December 31, 2023, we had $559.2 million and $558.7 million, respectively, of available borrowing capacity under the Revolving Facility, which matures in November 2027.

Previous wording

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 on August 8, 2023 (the “August 2023 Amendment”) and on February 13, 2024 (the “February 2024 Amendment”). The Original Term Loan B Credit Agreement, as amended by the August 2023 Amendment and the February 2024 Amendment is referred to herein as the “Term Loan B Credit Agreement.”

Current wording

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 HEYDUDE acquisition, which was amended on August 8, 2023 (the “August 2023 Amendment”) and on February 13, 2024 (the “February 2024 Amendment”). The Original Term Loan B Credit Agreement, as amended by the August 2023 Amendment and the February 2024 Amendment is referred to herein as the “Term Loan B Credit Agreement.”

Previous wording

As of June 30, 2024, the Term Loan B Facility was fully drawn with no remaining borrowing capacity, and we had $685.0 million in outstanding principal on the Term Loan B Facility, which matures on February 17, 2029.

Current wording

As of September 30, 2024, the Term Loan B Facility was fully drawn with no remaining borrowing capacity, and we had $575.0 million in outstanding principal on the Term Loan B Facility, which matures on February 17, 2029.