Crocs, Inc.

Good day and welcome to the Crocs, Inc. first quarter earnings call. All participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Erin Murphy, Vice President of Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining us to discuss Crocs, Inc. first quarter results. With me today are Andrew Reese, Chief Executive Officer, and Ann Melman, Executive Vice President, Crocs Brand President, and Chief Financial Officer. Following their prepared remarks, we will open the call for your questions, which we ask that you limit to one per caller. Before we begin, I would like to remind you that some of the information on this call is forward-looking and, accordingly, is subject to the safe harbor provisions of the federal securities laws. These statements include, but are not limited to, statements regarding our strategy, plans, objectives, expectations, and intentions, including our financial outlook. These statements involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to differ materially. Please refer to our quarterly report on Form 10Q and other reports filed with the SEC for more information on these risks and uncertainties. Certain financial metrics, as we refer to as adjusted or non-GAAP, are non-GAAP measures. A reconciliation of these amounts to their GAAP counterparts is contained in the press release we issued earlier this morning. all revenue growth rates will be cited on a constant currency basis unless otherwise stated. At this time, I'll turn the call over to Andrew Reese, Crocs Inc. Chief Executive Officer.

Thank you, Erin, and good morning, everyone. Thank you for joining us today. We reported very strong first quarter results, which well exceeded our guidance on both the top and bottom line. Revenue grew by 7% to prior year for the enterprise, led by outsized Crocs brand growth of 16%, and Hey Dude brand also performed ahead of guidance. Adjusted gross margins of 56% improved 180 basis points versus prior year, and we grew our adjusted earnings per share by 16% to $3.02. Our growth strategy remains consistent, and we are focused on three primary initiatives from an enterprise perspective, to fuel durable and consistent growth. One, ignite our icons across both brands to drive awareness and global relevance for new and existing consumers. Two, drive market share gains across our Tier 1 markets through strategic investment behind talent, marketing, digital, and retail. And three, attract new consumers to our brands through methodically diversifying our product range and usage occasions. Before I discuss more detail on the quarter, I want to start by saying how pleased I am to announce the hiring of Susan Healy as Executive Vice President and Chief Financial Officer. Susan is a seasoned financial professional and a Wall Street veteran with broad exposure to the consumer sector, including Ulta Beauty, where she served as the SVP of Finance for five years. Most recently, Susan served as a public company CFO for IAA, a global marketplace for automotive buyers and sellers. We have a deep finance bench and I'm excited about Susan's leadership and expertise. I look forward to working with her and for the investment community to get to know her in coming months. Starting with the Crocs brand, our socially led digital first marketing playbook continues to win with consumers across the world. And first quarter was no exception. In the US, we rank as a top 10 footwear brand in the Piper Sandler, taking stock with Team Spring Survey, taking the number seven spot, and maintaining our mind share year over year. This marks over four years of being a top 10 brand for the US team consumer. The democratic nature of our brand allows us to create a broad array of consumer moments that drive brand affinity and engagement through our partnership model. During the quarter, our success ranged from Toy Story and Hello Kitty to Klot, a Chinese streetwear brand. Our Toy Story collection was one of the most successful licensing partnerships to date, with a global offering available across select wholesale partners and our own DTC. In addition, we launched our second collaboration with Simona Rocha, a luxury brand. Our seven-style collection was priced between $175 and $225. It launched in 20 markets and sold out globally almost immediately. As we think about product, we continue to prioritize our three pillars, clogs, sandals, and personalization. Growth in our first quarter was led by our classic clogs, and we are seeing both new and existing consumers come to the brand through our icons. Our kids' business was another highlight with double digit growth in the quarter. We continue to create multi-product franchises that broaden users' occasions for the consumer. Building on the success of our Echo franchise, we launched the Echo Storm, a fully molded sneaker. This launched in our DTC channels as well as Foot Locker and JD Sports during the quarter and performed well. In fact, 59% of our Echo Storm purchases on our own .com were new consumers. Just in time for NBA All-Star Weekend, we further expanded visibility of our Echo franchise through the Crocs NBA slide, and players like Nikola Jokic to Steph Curry were spotted wearing them. During the first quarter, we rolled out two new saddle franchises, the 2.0 version of our classic slide and two-strap, and the Getaway. The Getaway leverages our newest proprietary material known as free-fill technology. Within this franchise, we've seen positive momentum with the strappy and the flip styles and have found that these resonate with a broad consumer segment. For the year, we continue to expect sandals to grow in excess of our overall growth and increase in penetration. Our personalization vehicle, Gibbets, grew double digits in the quarter, led by growth in Asia. We continue to see ample white space for personalization and our strategy is focused around three pillars. Number one, driving higher penetration within digital and wholesale. Two, continuing to create product freshness through our elevated gibbets, including metallic, texture, and jewelry. And three, speed to market. Moving on to distribution strategy, we are pleased by the broad-based strength across geography, and particularly in several of our Tier 1 markets. The North American market was well ahead of expectations and took meaningful market share during the quarter. North American revenues grew 9% versus the prior year, supported by underlying strength in wholesale sellout and better than expected trends in our DTC channels. International grew 24% versus prior year. And once again, we saw triple digit growth in China and Australia. Our direct markets in Western Europe grew double digits, led by growth in the UK, France, and Germany. We continue to have significant opportunity in China and we remain bullish on our long-term growth prospects. During the quarter, we won our first-ever Superbrand Day on Tmall and announced our two new brand ambassadors for 2024, Lo Hu Xin and Jun Kai Wang. Our Lo Hu Xin announcement came ahead of International Women's Day and featured the classic Keogh clock. This campaign drove substantial reach and continued to create buzz with the Dongmen community. Jun Kai Wang played into our clock relevance with a robust campaign on Superbrand Day, generating one million views during a one-hour live stream, and drove Crocs to the number one spot within the women's footwear category on Tmall. Our corporate responsibility efforts continue to progress. We are expanding our All Crocs New Life consumer take-back program to all Crocs stores in the U.S. This fall, we're furthering our circularity commitment by repurposing materials from well-loved Crocs in the form of a new limited edition classic clock. As it relates to the Hey Dude brand, our focus for 2024 is on solidifying the business and establishing the Wally & Wendy as iconic franchises for the consumer. We have worked to maintain price integrity on digital, improve channel inventories, and create more segmentation across wholesale partners. Our overall first quarter performance largely played out as we expected. We strengthened March driving slight upside to our guided revenue range. That said, performance around Easter and into April has fallen short of expectations with sellout rates softening in wholesale. Based on the visibility we have quarter to date and given the choppy retail environment, we're taking a more prudent approach around trends for the balance of the year. As we have discussed, our focus is on making sure we end the year with sell-in and sell-out trends converging. and we have better segmented inventory in the channel. Before I discuss a few key one highlights, I'd like to touch on our recent leadership announcement. Several weeks ago, we announced a new brand president for Hey Dude, who we see as a strong leader for the next phase of growth for the brand. We are thrilled to be welcoming back Terrence Riley to our Crocs Inc family. Terrence started last week and brings with him a best-in-class reputation from brands including Stanley and Crocs. In addition to providing global leadership perspectives, he has a proven track record of creating and executing brand building playbooks by leveraging iconic products, driving brand relevance, and ultimately building communities. Now turning to Q1 highlights. Hey Dude was the number eight preferred footwear brand in the Piper Sandler Taking Stock with Team survey this spring, consistent with this rank last year. From a product perspective, we continue to establish our Wendy and Wally icons through color, graphic, height, which proved successful during the quarter. In Q1, we expanded our collegiate program to five additional schools just in time for March Madness. We also launched the Big Lebowski, an online exclusive. The unique collaboration saw impressive sellout with 80% of consumers need to brand. Our sneaker franchise gained a new addition with the Hudson for him and the Hudson lift for her. We chose to introduce the new silhouettes in our own DTC channels and with an exclusive wholesale partner. We saw the Hudson lift quickly become a hit for our younger female consumers who continue to choose height while maintaining a brand promise of lightweight comfort. From a distribution perspective, we opened six new outlet locations for the Haiti brand. Overall performance is in line with our expectations, and we plan to open approximately 30 outlets this year. On the wholesale side, we're pleased with the work we have done to clean up our account base. Our go-forward focus is around improved customer segmentation. Finally, we've introduced the brand to the UK and Germany, supported by dedicated digital sites, as well as placement with key wholesale partners in both markets during Q1. These launches were supported by key influencer and media events. While we're starting to see the awareness of the brand internationally, Our priority in 2024 is around improving the long-term health of the North American market as we build our core offering and drive heat for the brand. We have laid plans to continue to invest behind marketing, talent, digital, and retail to further support our market share opportunity. While our near-term plans for Hey Dude are taking longer to play out, our record Q1's performance, led by Crocs, showcases the diversification of our portfolio and enabled us to raise our earnings per share outlook for the year. We will continue to make offensive investments fueled by strong growth margins to set ourselves up for long-term growth and durable market share gains. I will now turn the call over to Anne to walk through our financials for the quarter.