Crocs, Inc.

Good morning and welcome to the Crocs, Inc. Third Quarter 2025 Earnings Conference Call. All participants will be in 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, Senior Vice President of Investor Relations and Strategy. Please go ahead.

Good morning, and thank you for joining us to discuss Crocs, Inc. third quarter results. With me today are Andrew Reese, Chief Executive Officer, and Patrick Reagan, Executive Vice 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 provided on this call is forward-looking and, accordingly, is subject to the safe harbor provisions of the federal securities laws. 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 most recent annual report on Form 10-K, quarterly report on Form 10-Q, and other reports filed with the SEC for more information on these risks and uncertainties. Certain financial metrics that 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. Before we discuss the quarter, I would like to start by welcoming Andrew. our chief financial officer, Patrick Reagan, to his first Crocs Inc. earnings call. Our third quarter performance was driven by managing both of our brands in a disciplined fashion, streamlining our cost structure and controlling our inventory in the marketplace. We deliver very strong profitability and cash flow, which enabled us to repurchase 2.4 million of our outstanding shares and pay down $63 million of debt. These are fundamental lovers of a value creation model. While our results came in ahead of our expectations, I acknowledge that this performance is not up to the standards that we expect for ourselves. We're working to regain momentum in the marketplace, and our teams have already begun executing against our strategies. With this in mind, I would like to begin the call today by elaborating on the progress we have made on our strategic pillars for both Crocs and Hey Dude, and the speed at which we are driving further simplicity and cost reductions across our enterprise. Patrick will then provide a more detailed overview of our financial results and outlook. Starting with the cross-brand, as we communicated last quarter, we elected to take two strategic actions to protect the long-term brand health. First, we pulled back on the breadth and depth of promotional activity across our digital channels in North America. This promotional pullback has had the greatest impact on our classic clog business as we work harder to protect our icon. Second, we continue to reduce receipts into the wholesale channel to better match supply to demand and ultimately drive a demand led model. While these actions are impacting near-term sales, we expect them to enable a foundation for future growth. Further, we have seen a net positive benefit to our gross profit dollars in North America as a result of our pullback on promotions. Our return to growth in North America will be based on greater product innovation, diversification within clogs, growth within sandals and new categories. We are carefully managing classic clog franchise with the desired outcome of creating clearer segmentation while leaning into innovation within new clog and sandal introductions. While improving the trajectory of North America is a top priority, we are making good progress against our five strategic pillars for the Crocs brand. First, we will continue to drive brand relevance through clog iterations and innovation. During the quarter, we introduced the Crafted Clog starting at $60. This new franchise incorporates a non-molded, comfortable upper with a jibitable backstrap as we put personalization to the forefront of our design. We featured Lola Tung, the actress of hit show, The Summer I Turned Pretty, to bring this to market. Following our initial sell-out on TikTok Shop, we have seen strong consumer response in all channels. We're also focused on scaling existing cloud franchises, including CrockBand and Echo. Within the Echo franchise, we launched the Echo RO during the quarter and saw immediate success. Looking to 2026, We will expand our crafted franchise with new materializations, launch a new and improved Krog brand, which is already an established fan favorite in our portfolio and introduce Echo 2.0 Klog. We expect product diversification within our Klog pillar to enable greater channel segmentation and drive long-term growth in our Klog franchise. Second, we're focused on diversifying outside of Klogs through new category expansion. Our sandals pillar outperformed the broader portfolio and took market share in this quarter with strong full price performance across our style franchise, including Brooklyn, Getaway, and Miami. Retailers have continued to chase these key styles beyond the back to school season. As we look into 2026, these franchises paired with the reintroduction of an updated personalizable two strap sandal, underscores our opportunity to gain further market share in this category. We are also excited with the response we have received around our new Cozy franchise, the Unforgettable, which we launched in partnership with actress Millie Bobby Brown. This style has already seen a very positive response on TikTok, resonating particularly well with the Gen Z female consumer. The Unforgettable, along with broader newness in our Cozy assortment, has catalyzed our line business so far this season. Third, we will fuel consumer engagement with disruptive digital and social marketing. During the quarter, we launched a multi-year agreement with the NFL, which featured our classic and classic line clogs, as well as gibbets. This release exceeded our expectations with particularly strong sell-through across the board, leading to multiple restocks. Other highlights in the quarter included a disruptive launch with Krispy Kreme and our newest release on Roblox. In the quarter, we launched a Pan-Asian monsoon campaign, Your Crocs, Your Splash. This campaign positions a classic clog as the footwear of choice for the rainy season and stars two prominent actors from South Korea and India. The campaign video generated approximately 575 million views across Instagram and YouTube. These partnerships are prime examples of how our brand excites, inspires, and connects with a wide range of consumers across the globe. Fourth, we'll continue to create compelling consumer experiences across distribution. Year to date, we've accelerated our first mover advantage in social commerce. We remain the number one footwear brand on TikTok shop in the US, and the growing adoption of this platform is gaining momentum with the younger consumers. This month, we created further disruption in the market by live streaming both of our brands on TikTok Shop and our own .com throughout the month of October. Through this initiative, we have seen an uptick in our followers and influx of new consumers. In fact, Crocs was the first fashion brand to live stream 24-7 for an entire month across TikTok and .com. We're continuing to expand this partnership and have launched TikTok Shop in the UK, Germany, and Brazil. Fifth, we see significant opportunity to capture greater share across our international markets, many of which are still in their infancy of growth. In the third quarter, we saw broad-based strength across our Tier 1 international markets. China delivered revenue growth across all channels and was up mid-20% to prior year. outperforming the overall market handily. During the quarter, we launched a unique PopMart times Skull Panda collaboration, which included a Duoyuan livestream on PopMart's page and was a smash hit in China. In addition to China, we saw a strong growth in Japan and across all of our key markets in Western Europe. In summary, our priorities are clear, driving product innovation in clogs and sandals, staying agile and consumer-focused, while sharpening segmentation and accelerating international growth, but penetration opportunities remain. Turning now to HeyDude. We delivered third quarter results that came in ahead of expectations. We are encouraged by the progress we're making in stabilizing the brand in North America to return to profitable growth. Let me share more about the actions we have taken and what gives me confidence in our ability to reestablish brand growth. First, we're focused on building a community. Our recently refreshed Consumer Insights work underscores that we have a passionate group of brand fans, ones that identify as laid-back and no-fuss, but clearly seek the comfortable and lightweight products we have to offer. We launched our Hey Do Country campaign in June, which plays to our brand's affinities, including music, travel, and pre-imposed sport, and is centered around this laid-back, no-fuss consumer. Relatedly, we are encouraged to see the brands return to the top 10 preferred footwear brands among males in the Piper Sandler Taking Stock with Teens survey this fall. Second, our product direction is clear. We're building the core and thoughtfully adding more. Within our Wally and Wendy franchise, we launched the stretch socks and its performance has already surpassed legacy socks on a like-for-like basis. In 2026, we will launch stretch jersey a sweatshirt for your feet, and retailer response to this product has been very strong, as it appeals to both her and him. Outside of Accor, we are seeing continued traction of our Paul franchise, which plays into a dress casual sneaker space, and we're solidly building on our slipper success again this holiday. Earlier this month, we launched our third collaboration with Jelly Roll, featuring the fan favorite Bradley Boot in two colorways, The initial launch on TikTok Shop drove the largest single day for Hey Dude on the platform to date. We see this collab as serving to Halo, a broader boot offering as we move into holiday. Third, we're focused on continuing to clean up channel inventory in the North America marketplace. During the third quarter, we accelerated returns and marked down allowances to our retailers to improve inventory health while elevating our brand presentation at Wholesale. The nature of these cleanup actions has had an impact on revenue in the third quarter through vendor returns, and we're planning for continued markdown support in the fourth quarter. These actions have been effective in cleaning up the channel and establishing a foundation for future growth. On an enterprise basis, we're working to quickly right-size our cost base. As we shared on the last call, we've already taken action on $50 million of gross cost savings this year and have since identified another $100 million of gross cost savings across the business to simplify the organization. While Patrick will go into more detail shortly, we expect these cost savings to generate greater flexibility across the P&L, enabling future investment to drive growth for our brands. At this time, I will turn the call over to Patrick to provide more detail around our third quarter financial performance and our fourth quarter outlook.