Crocs : Q4 - Invertor Presentation

INVESTOR PRESENTATION

February 2021

Some information provided in this document will be forward-looking, and accordingly, is subject to the Safe Harbor provisions of the federal securities law. These statements include, but are not limited to, statements regarding potential impacts to our business related to the COVID-19 pandemic, our financial condition, brand and liquidity outlook and expectations regarding our future revenue, tax rate, inventory and capital expenditures. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performances, or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the COVID-19 outbreak and related government, private sector, and individual consumer responsive actions; current global financial conditions, including economic impacts resulting from the COVID-19 outbreak; the effect of competition in our industry; our ability to effectively manage our future growth or declines in revenues; changing consumer preferences; our ability to maintain and expand revenues and gross margin; our ability to accurately forecast consumer demand for our products; our ability to successfully implement our strategic plans; our ability to develop and sell new products; our ability to obtain and protect intellectual property rights; the effect of potential adverse currency exchange rate fluctuations and other international operating risks; and other factors described in our most recent Annual Report on Form 10-K under the heading "Risk Factors" and our subsequent filings with the Securities and Exchange Commission. Readers are encouraged to review that section and all other disclosures appearing in our filings with the Securities and Exchange

Commission. Crocs is not obligated to update these forward-looking statements to reflect the impact of future events.

2

• • 2020 Highlights

• • Positioned for Global Growth

• • Financial Results

• • Appendix

3

Executive Summary

• • Highest quarterly revenue in company history achieved in the fourth quarter

• • Record 2020 revenue of $1.4bn, up over 12%, which was in line with pre-COVID guidance

• • 2020 Digital revenue growth +50% resulting in record digital penetration of 42%; DTC comparable sales +39%

• • 2020 adjusted operating margin of 19%

• • Doubled adjusted diluted EPS to record $3.22

• • Record cash flow generation

• • Accelerated revenue growth of 20-25% anticipated for 2021

• • Comprehensive ESG framework to be rolled out in 2021

Source: Images from Footwear News.

4

Source: Image from Reddit.

Incredible Year for Crocs

• • Record revenue of $1.4bn in 2020, +13% amidst the COVID-19 pandemic

• • Awarded Footwear News Achievement Awards (FNAA) 2020 Brand of the Year

• • Increased brand desirability, relevance and consideration by double digits for 4th consecutive year

• • Accelerated digital growth of 50% to represent an estimated 42% of 2020 revenue

• • Donated >860,000 pairs of shoes, ~$40M retail value, to frontline healthcare workers

• • Significantly increased EBITDA and operating margins

• • Record cash flow generation

Source: Image from Vogue UK.

6

Exceptional Revenue Growth and Adjusted Operating Margin

2,000

1,500

1,000

500

0

2018

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

2019

2020

2021E

YOY Growth

+6.3%

+13.1%

+12.6%

+20-25%

Note: Revenue in USD millions.

7

2020 HIGHLIGHTS

Best in Class Marketing Activations: 4Q 2020

8

2020 HIGHLIGHTS

Accelerated Digital Growth in 2020

• • 2020 Digital revenue +50% with growth in all regions

• • Strong 2020 e-commerce growth of +58%

• • Double-digit growth across multiple e-tail platforms

2020 Digital Penetration

55%

Americas

Asia Pacific

EMEA

2019

2020

2019 Global

2020 Global

9

Four Key Product Pillars

Clogs: Innovate & grow clog relevance

Sandals: Significant long-term growth potential

Personalization

Visible Comfort Technology

Powerful Social & Digital Marketing

Digital and social focus globally

Come As You Are

Brand ambassadors

Social influencers

Collaborations

Select growth drivers highlighted in today's presentation.

Digital-Led Route to Market

E-commerce: Double-digit plus growth continues

Retail: Prioritize outlets as most profitable retail format

Wholesale: Strong growth opportunities within e-tail accounts; long-term growth potential with distributors

Largest Long-Term Growth Opportunity in Asia

Americas: Strong growth momentum

EMEA: Solid growth on brand heat

Asia: Largest long-term growth potential

POSITIONED FOR GLOBAL GROWTH

Significant Long-Term Growth Potential in Sandals

• • $30B global category growing ~4% p.a. − Fragmented market with no clear leader − Crocs opportunity is to grow our share

• • Consistent track record of growth ‒ 18% of footwear sales in 2020 ‒ Pre-COVID, three consecutive years of double-digit growth

• • Key drivers of sandal growth are:

  • ‒ Targeting female explorers

  • ‒ Marketing to support awareness

  • ‒ Higher purchase frequency to address multiple wearing occasions

Source: L.E.K. Consulting and internal estimates.

POSITIONED FOR GLOBAL GROWTH

Capitalize on Personalization Trend with JibbitzTM Charms

• • Personalization is a global megatrend

• • Optimistic story-telling and personalization will be even more critical post COVID-19

• • Offers newness and inspiration at a compelling price point at point of sale

• • Enhances average selling price (ASP)

• • Jibbitz audience has ~2x customer lifetime value*

• • Drives relevance for the Crocs brand and supports clog and sandal sales

• • Jibbitz revenues nearly doubled in 2020

* Represents behavior of global crocs.com customers for trailing twelve months as of November 2020. Actual CLV calculated using average order value and order frequency over last 365 days. Customers who purchased at least 5 Jibbitz over the last 365 days qualify as a Jibbitz shopper.

2015

2016

2017

E-Commerce Penetration

2018

E-Tail Penetration

2019

2020

Note: Chart reflects digital sales (e-commerce and e-tail) as a percentage of total sales.

POSITIONED FOR GLOBAL GROWTH

The China Opportunity

Significant Whitespace

• • 2nd largest footwear market in the world

• • Underpenetrated with only ~5% of our 2019 sales in China

Investing for Growth

• • Building brand awareness in second year with Yang Mi

• • Developing local-for-local marketing and collaborations

• • Changing brand image through new concept stores

• • Focusing on key T1 and T2 cities with high spending power and participation of Gen Z consumers

• • Repositioning to a higher quality partner store network

• • Accelerating strong e-commerce presence through marketplaces (JD, Tmall, VIP)

• • Maintaining focus through Board oversight committee

We anticipate accelerated growth in 2022

2020: A Very Successful Year

• • Robust revenue growth (+13%)

• • Improved quality of revenues ‒ Fewer discounts and promotions

• • Expanded margins

  • ‒ Higher prices

  • ‒ Fewer discounts and promotions

  • ‒ Favorable product mix

  • ‒ Leveraged SG&A, while supporting growth

• • Invested to support future growth − Doubled E-com distribution capacity in the US − Relocating EMEA DC in 2021

• • Strengthened balance sheet

Source: Image from Forbes.

FINANCIAL RESULTS

2020 Q4 Financial Results

Q4

vs. PY

Revenue

Gross Margin

Adj. Gross Margin**

Adj. SG&A as % of Revenue**

Operating Margin

Adj. Operating Margin**

• $411.5 +56.1%*

• 55.7% +770 bp

• 56.0% +670 bp

• 34.9% +950 bp

• 15.7% +1,250 bp

• 21.1% +1,620 bp

• Diluted EPS $2.69 +827%

• Adj. Diluted EPS** $1.06 +783%

* Revenue growth on a constant currency basis.

** See reconciliation to GAAP equivalents in Appendix

FINANCIAL RESULTS

FINANCIAL RESULTS

2020 Financial Results

2020

vs. PY

Revenue

Gross Margin

Adj. Gross Margin**

Adj. SG&A as % of Revenue**

Operating Margin

Adj. Operating Margin**

• $1,386.0 +13.5%*

• 54.1% +400 bp

• 54.6% +350 bp

• 35.6% +390 bp

• 15.4% +490 bp

• 18.9% +730 bp

• Diluted EPS $4.56 +175%

• Adj. Diluted EPS** $3.22 +100%

* Revenue growth on a constant currency basis.

** See reconciliation to GAAP equivalents in Appendix

Shareholder Returns: Share Repurchase

• • Since 2016, we have repurchased $431M in shares at an average price of $22.65 per share

0

% of Basic WASO Avg. Repurchase Price Share Count (10-K Filing)

2016

$0

2017

$147

$63

$171

2018

2019

2020

-- --73,691

7.8% $8.82 68,831

8.6% $17.44 73,336

8.6% $24.20 68,268

5.5% $46.50 65,440

Note: Share repurchase in USD millions. Basic weighted average shares outstanding (WASO) per Income Statement. Ending share count in thousands as published on Form 10-K.

2020 Tax Restructure

• • In Q4, we completed a series of transactions resulting in changes to our international legal structure, including a transfer of certain intellectual property (IP) rights to the Netherlands, primarily to align with current and future international operations

• • The transfer resulted in a step-up in tax basis of IP rights and a correlated increase in foreign deferred tax assets based on the fair value of the transferred intellectual property rights

• • A net deferred tax asset of $127.7M was recognized along with a corresponding foreign deferred income tax benefit

• • This change is anticipated to generate ~$25M of annual cash tax savings for the foreseeable future

• • GAAP requires that we take the net present value of these cash savings upfront, which is why we will provide a non-GAAP tax rate to better reflect our cash tax rate

• • For the foreseeable future, we anticipate:

  - GAAP effective tax rate of approximately 25%

  - Non-GAAP effective tax rate of approximately 16% to 18%

• • Please refer to our Form 10-K filing for additional detail

2021 Reporting Changes

• • To reflect the importance of Direct to Consumer (DTC), we will report two channels - DTC and Wholesale

  • ‒ Combining Retail and E-Com channels into a new DTC channel

  • ‒ Reporting DTC Revenue and DTC Comp only

  • ‒ Continuing to report Digital as a % Revenue

• • Reportable operating segments of Americas, Asia Pacific, and EMEA remain unchanged

DTC

WholesaleDigital

2021 Outlook

Assuming no impact of future COVID-related shutdowns in major markets, we expect:

Q1 2021E	FY 2021E
Revenue Growth	40-50%	20-25%
Non-GAAP Adjustments to Gross Margin	$3M	$12-15M
Adjusted Operating Margin	17-18%	18-19%
GAAP Tax Rate	25%
Non-GAAP Tax Rate	16-18%
Capital Expenditures	$100-$130M

Note: All figures are approximate. USD millions where noted.

Key Investment Highlights

• • Leading Global Footwear Brand Anchored by Iconic Product with Democratic Appeal

• • Market Leader in Clog Category with Significant Whitespace in Sandals and Personalization

• • Accelerating Our Industry Leading Digital Penetration

• • Global Footprint with Opportunity to Grow and Scale International Markets

• • Authentic, Come As You Are Culture with Commitment to ESG

• • Strong Financial Profile and Exceptional Free Cash Flow Generation

• • Best-in-Class Management Team with Deep Industry Knowledge and Expertise

COMPREHENSIVE ESG COMMITMENT

Environment

Social

Governance

• • Sustainable Ingredients

  • • Human Capital

    • • Board and Management

• • Resource Use

• • Packaging

• • End of Life

• • Social Capital

• • Community Involvement / Crocs Cares

• • Business Ethics / Risk Management

• • Accounting Practices / Internal Controls

Select ESG Data

Environment

• • Joined Sustainable Apparel Coalition (SAC)

• • Exploring environmentally-friendly raw materials

• • Currently rework ~45% of our Croslite production waste back into our production processes

• • Over 98% of our product line is currently Vegan with a goal of being a 100% Vegan brand by the end of 2021

• • In 2020, over 85% of our product has been sold without shoe boxes

• • Over the past 5 years, we've been able to save almost 250M shoe boxes from entering the market

• • Partner with several organizations to keep unsellable product and samples out of the landfill, with >90,000 pairs of shoes donated in 2020

Social

• • Diverse workforce with diversity recruiting strategy − Female: 52% Management / 68% All Other − URG*: 23% Management / 57% All Other

• • Culture of learning & development

• • Regular engagement / employee listening

• • Implemented pay equity practices

• • Established CAYA* Councils and CAYA Series

• • Maintain a factory Social Compliance Code of Conduct and Certification Process

• • Social compliance audits in accordance with WRAP* principles

• • Monitor ~600 chemicals in our supply chain for compliance with legal/regulatory requirements

• • Crocs Cares provides shoes, funds and time, with ~1 million pairs donated in the past 5 years

Governance

• • Remains an area of strength evidenced by ISS and MSCI rankings

• • Diverse Board: 38% Female / 13% URG*

• • Responsible and performance-driven compensation programs

• • Effective Enterprise Risk Management (ERM) and Ethics & Compliance program frameworks

• • Established an ESG/sustainability management and oversight framework

• • Strong internal controls, accounting and audit practices

Note: URG represents underrepresented groups. CAYA represents "Come as You Are". WRAP represents Worldwide Responsible Accredited Production.

26

NON-GAAP RECONCILIATION

Non-GAAP cost of sales, gross profit, and gross margin reconciliation:

Non-GAAP selling, general and administrative expenses reconciliation:

Three Months Ended December	Year Ended	Year Ended
31,	December 31,	31,	December 31,

Three Months Ended December

2020

2019

2020

(in thousands)

2019

GAAP revenues $ 411,506	$ 262,979	$ 1,385,951	$ 1,230,593
GAAP cost of sales $ 182,422	$ 136,741	$ 636,003	$ 613,537
New distribution centers (1) (1,550)	(3,413)	(4,186)	(11,394)
COVID-19 inventory write-off (2) -	-	(2,396)	-
Other -	84	(119)	(91)
Total adjustments (1,550)	(3,329)	(6,701)	(11,485)
Non-GAAP cost of sales $	180,872	$	133,412	$	629,302	$	602,052
GAAP gross profit $ 229,084	$ 126,238	$ 749,948	$ 617,056
GAAP gross margin 55.7 %	48.0 %	54.1 %	50.1 %
Non-GAAP gross profit $ 230,634	$ 129,567	$ 756,649	$ 628,541
Non-GAAP gross margin 56.0 %	49.3 %	54.6 %	51.1 %

• (1) Represents expenses, including expansion costs, related to our distribution centers in Dayton, Ohio and Dordrecht, the Netherlands and initial costs for our new third-party operated distribution center in Chiba, Japan.

• (2) Represents an inventory write-off in our Asia Pacific segment associated with the impact of COVID-19.

GAAP revenues	$ 411,506	$ 262,979	$ 1,385,951	$ 1,230,593
GAAP selling, general and administrative expenses	$ 164,453	$ 117,882	$ 535,824	$ 488,407
Donations of inventory	70	-	(9,900)	-
COVID-19 severance costs	-	-	(2,403)	-
COVID-19 impact of bad debt expense (1)	315	-	(4,118)	-
Other COVID-19 costs (2)	(18)	-	(845)	-
Asset impairments (3)	(21,071)	-	(21,071)	-
Duplicate headquarters rent (4)	(154)	-	(1,274)	-
Non-recurring expenses associated with cost reduction initiatives in 2019	-	(584)	-	(2,282)
Offering fees (5)	-	(589)	-	(589)
Other (6)	8	-	(2,125)	-
Total adjustments	(20,850)	(1,173)	(41,736)	(2,871)
Non-GAAP selling, general and administrative expenses (7)	$	143,603	$	116,709	$	494,088	$	485,536
GAAP selling, general and administrative expenses as a percent of revenues	40.0 %	44.8 %	38.7 %	39.7 %
Non-GAAP selling, general and administrative expenses as a percent of revenues	34.9 %	44.4 %	35.6 %	39.5 %

2020

2019

2020

(in thousands)

2019

• (1) Represents bad debt expense associated with the impact of COVID-19 on wholesale partners in our Asia Pacific and Americas segments.

• (2) Represents costs incurred in response to the COVID-19, including hazard pay, cleaning costs, and legal costs.

• (3) Represents impairments to our long -lived assets for a retail store in New York City and for our former corporate headquarters in Niwot,

  Colorado.

• (4) Represents ongoing duplicate rent costs associated with our move to our new headquarters in Broomfield, Colorado, while we conclude the lease for our former headquarters.

• (5) Represents fees associated with the November 4, 2019 underwritten public offering, in which certain investment funds affiliated with The

  Blackstone Group Inc. sold 6.9 million shares of our stock to Morgan Stanley & Co. LLC. We did not receive any proceeds from this sale.

• (6) Represents non -recoverable duties, non -recurring costs related to the closure of company -owned retail stores in Australia, employee severance costs, and various other immaterial items.

• (7) Non-GAAP selling, general and administrative expenses are presented gross of tax.

Non-GAAP income from operations and operating margin reconciliation:	Non-GAAP income tax expense (benefit) and effective tax rate reconciliation:
Year Ended	Year Ended
31,	December 31,	31,	December 31,

Three Months Ended December

Three Months Ended December

2020

2019

2020

(in thousands)

2019

GAAP revenues $ 411,506	$ 262,979	$ 1,385,951	$ 1,230,593
GAAP income from operations $ 64,631	$ 8,356	$ 214,124	$ 128,649
Non-GAAP cost of sales adjustments (1) 1,550	3,329	6,701	11,485
Non-GAAP selling, general and administrative expenses adjustments (2) 20,850	1,173	41,736	2,871
Non-GAAP income from operations $	87,031	$	12,858	$	262,561	$	143,005
GAAP operating margin 15.7 %	3.2 %	15.4 %	10.5 %
Non-GAAP operating margin 21.1 %	4.9 %	18.9 %	11.6 %

(1)

See 'Non-GAAP cost of sales and gross margin reconciliation' above for more details.

(2) See 'Non-GAAP selling, general and administrative expenses reconciliation' above for more details.

GAAP income from operations $ 64,631	$ 8,356	$ 214,124	$ 128,649
GAAP income before income taxes 63,423	6,220	206,979	119,322
Non-GAAP income from operations (1) $ 87,031	$ 12,858	$ 262,561	$ 143,005
GAAP non-operating income (expenses):
Foreign currency gains (losses), net 306	(430)	(1,128)	(1,323)
Interest income 26	108	215	601
Interest expense (1,149)	(1,893)	(6,742)	(8,636)
Other income (expense), net (391)	79	510	31
Non-GAAP income before income taxes $	85,823	$	10,722	$	255,416	$	133,678
GAAP income tax benefit $ (119,907)	$ (13,693)	$ (105,882)	$ (175)
Tax effect of non-GAAP operating adjustments 6,014	1,126	12,123	3,589
Benefit of U.S. deferred tax assets previously subject to valuation allowance in 2019 -	14,655	-	14,655
Intra-entity IP transfer (2) 127,718	-	127,718	-
Non-GAAP income tax expense $	13,825	$	2,088	$	33,959	$	18,069
GAAP effective income tax rate (189.1)%	(220.1)%	(51.2)%	(0.1)%
Non-GAAP effective income tax rate 16.1 %	19.5 %	13.3 %	13.5 %

2020

2019

(in thousands)

• (1) See 'Non-GAAP income from operations and operating margin reconciliation' above for more details.

(2)

2020

2019

Represents changes to our international legal structure, including an intra-entity transfer of certain intellectual property rights, primarily to align with current and future international operations. The transfer resulted in a step -up in tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets based on the fair value of the transferred intellectual property rights.

Non-GAAP earnings per share reconciliation:

Numerator:

GAAP net income

Non-GAAP cost of sales adjustments (1) Non-GAAP selling, general and administrative expenses adjustments (2)

Non-GAAP other income adjustment (3) Tax effect of non-GAAP adjustments (4)

(in thousands, except per share data)

Non-GAAP net income

72,264$

Three Months Ended

December 31,2020

$

183,330$ 1,55020,850-(133,466)

Denominator:

GAAP weighted average common shares outstanding - basic

Plus: GAAP dilutive effect of stock options and unvested restricted stock units

GAAP weighted average common shares outstanding - diluted

67,38670,357 1,1581,414 68,54471,771

66,7291,325

2019

19,913$ 3,3291,173-(15,781)

8,634$

68,4411,402

GAAP net income per common share:

Basic

Diluted

2.75$ 2.69$

$ $

Non-GAAP net income per common share:

Basic

Diluted

0.29$ 0.29$

• (1) See 'Non-GAAP cost of sales, gross profit, and gross margin reconciliation' above for more information.

• (2) See 'Non-GAAP selling, general and administrative expenses reconciliation' above for more information.

• (3) Represents a fair value adjustment associated with our donations of inventory.

  2020

  312,861$ 6,70141,736

  (919)(139,841)

  220,538$

• (4) See 'Non-GAAP income tax expense (benefit) and effective tax rate reconciliation' above for more information.

Year Ended December 31,2019

119,497 11,485 2,871 - (18,244) 115,609

4.64$ 1.70

4.56$ 1.66

First Quarter 2021:

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL GUIDANCENon-GAAP operating margin reconciliation: GAAP operating margin

Non-GAAP adjustments associated with distribution center investments

Approximately:

Non-GAAP operating margin

1% 17% to 18%

Full Year 2021:

Non-GAAP operating margin reconciliation:Approximately:

GAAP operating margin	17% to 18%
Non-GAAP adjustments associated with distribution center investments	1%
Non-GAAP operating margin	18% to 19%
Non-GAAP effective tax rate reconciliation:
GAAP effective tax rate	25%
Non-GAAP adjustments associated with amortization of IP	(7)% to (9)%
Non-GAAP effective tax rate	16% to 18%