#1CROCS inc TM Q3 2023 Investor Presentation ON Ouch 05 125 Creo-chails SAAKS SIE 207 19 G OFTE#2Forward Looking Statement This document includes estimates, projections, and statements relating to our business plans, commitments, objectives, and expected operating results that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements regarding potential impacts to our business related to our supply chain challenges, cost inflation, our financial condition, brand and liquidity outlook, and expectations regarding our future revenue, margins, non-GAAP adjustments, tax rate, earnings per share, debt ratios and capital expenditures, share repurchases, the acquisition of HEYDUDE and benefits thereof, Crocs' strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential, statements regarding fourth quarter and full year 2023 financial outlook and future profitability, cash flows, and brand strength, anticipated product portfolio and our ability to deliver sustained, highly profitable growth and create significant shareholder value. 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: our expectations regarding supply chain disruptions; the COVID-19 pandemic and related government, private sector, and individual consumer responsive actions; cost inflation; current global financial conditions, including economic impacts resulting from the COVID-19 pandemic; 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. All information in this document speaks only as of November 2, 2023. We do not undertake any obligation to update publicly any forward-looking statements, whether as a result of the receipt of new information, future events, or otherwise, except as required by applicable law. CROCS inc 2#3Contents Q3 Highlights Q3 Financial Review Appendix CROCS inc LITE#4Q3 Highlights CROCS inc 4#5Q3 HIGHLIGHTS CROCS inc We delivered a strong third quarter, exceeding the high-end of our guidance, led by double- digit revenue growth in our Crocs Brand supported by healthy full-price selling and industry-leading operating margins. Both our brands gained share during the back-to-school season. During the quarter, we took decisive action around HEYDUDE to accelerate our marketplace management strategy to ensure long-term brand health. As such, we are adjusting our full-year outlook to reflect this shift. - Andrew Rees, CEO LO 5#6Q3 HIGHLIGHTS Q3 2023 Highlights • Revenues of $1,046M, +6% CC(¹) O O Crocs Brand revenues of $799M, +11% CC (¹) Asia revenues up +29% CC¹); China >+90% CC North America revenues +8% CC(¹) driven by newer products such as Echo, Mega Crush DTC comparable sales growth +15% HEYDUDE Brand revenues of $247M, (9)% CC(¹) DTC growth of +15% CC(¹) Digital growth of +6% CC(¹) ■ Adjusted operating margin of 28.3% (2), +40 bps YoY Adjusted diluted EPS +9% to $3.25 per share(2) • Debt paydown of $90M; Repurchased $150M of shares • Gross leverage was 1.7x at quarter end 1. CROCS inc2 2. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. See reconciliation to GAAP equivalents in Appendix. 6#7Q3 HIGHLIGHTS Diversifying the Crocs Clog Silhouette BAAD Echo CROCS inc Mega Siren 7#8Q3 HIGHLIGHTS Importance of Sandals to the Crocs Brand Sandals are a key strategic pillar in $30B global category Revenues +6% YoY on top of nearly 20% growth in 2022; +35% TTM Additional entry point for the Crocs Brand Crocs Brand sandal consideration is on par with that of clogs We expect sandal revenues to be ~$400M in 2023, up from ~$310M in 2022 CROCS inc CEO OF y 8#9Q3 HIGHLIGHTS Recent Crocs Product & Marketing Wins T CROCS inc Wildl SALEHE BEMBURY. 27183 WWW CUP at Gain 95 9#10Q3 HIGHLIGHTS Asia is an Important Driver of Long-Term Growth In Asia, growth was broad-based with strong brand momentum throughout the region including Australia, China, South Korea and Southeast Asia. China revenues grew over 90% in the third quarter. CROCS inc $279 FY20 Asia Pacific Revenues ($M) 30% CAGR CC GROWTH(¹) $350 FY21 +22% $474 FY22 +47% Revenue dollars in millions. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. $604 Q3 2023 TTM +43% 10#11Q3 HIGHLIGHTS Crocs Brand China Update crocs x FenG CHen WANG Feng Chen Wang CROCS inc GOODEES World crocs™ Crocs x GOODBAI AiB Festion Full CROCS DIFCRA crocs Zhou Yutong Crocs has a passionate fan JIR base with ~60M Uses of the hashtag 洞门, meaning "clogs followers" on RED Big Brand Day Siren Clog sold out in first day as height resonated with consumers 11#12Q3 HIGHLIGHTS HEYDUDE Back-To-School Product Highlights Wally Sox Micro Black CROCS inc de Wendy Funk Mono Electric Pink ele Sirocco Sneaker F 12#13Q3 HIGHLIGHTS Recent HEYDUDE Marketing Wins Key Stats Brand awareness up to 32% from 18% in 5 months(¹) HEYDUDE ranked #7 favorite footwear brand(2) Mindshare up ~3x In underpenetrated markets (2) CROCS inc 2. HEY DUDE DUDE P PERFECT DUDE Per Internal Brand Health Tracker Studies performed in April and September 2023 Piper Sandler Fall 2023 "Taking Stock With Teens" survey Back to Campus BO 13#14Q3 HIGHLIGHTS Strategic Wholesale Account Update Q3 2022 Wholesale Sales Mix CROCS inc Strategic 39% OO- Q3 2023 1. Sell-out revenue for wholesale based on SPS and excludes gray market sales Strategic 50% +28% YOY strategic account sell-out(¹) 14#15Q3 HIGHLIGHTS Progress of Account Rationalization Expect cleaner account base to begin 2024 having: ● Curtailed over 50% of non-strategic accounts in 2023 • Pulled-back on digital rights for accounts that fall outside of our strategic alliance accounts CROCS inc # Accounts ~1,300 Legacy Accounts Over 50% reduction Account Curtailment -600 Dec '23E 15#16Q3 Financial Review CROCS inc 16#17Q3 FINANCIAL HIGHLIGHTS Q3 2023 Financial Highlights Revenues ($M) Gross Margin Adjusted Gross Margin (²) Adjusted SG&A as % of Revenue (2) Operating Margin Adjusted Operating Margin(²) Diluted EPS Adjusted Diluted EPS (2) CROCS inc 1. 2. Q3 $1,046 55.6% 57.4% 29.1% 26.2% 28.3% $2.87 $3.25 B/(W) vs. PY +6%(1) +70 bp +230 bp (190) bp (60) bp +40 bp +6% +9% Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. See reconciliation to GAAP equivalents in Appendix. 24 Antido LAS 17#18Q3 FINANCIAL HIGHLIGHTS Diversified Sources of Growth TTM Q3 2023 Revenue Breakdown 40% of Crocs Brand TTM sales were from International markets CROCS inc Brand HEYDUDE 25% O Crocs 75% Digital Penetration (¹) O Digital 38% Note: Data is for trailing twelve months ended September 30, 2023 1. Digital sales include crocs.com, heydude.com, third-party marketplaces (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando). EMEALA 17% Asia Pacific 16% Geography WHL 53% O Channel North America 67% DTC 47% 18#19Q3 FINANCIAL HIGHLIGHTS Crocs Brand Q3 Revenue Highlights Q3 Revenue Driver Growth Rates(¹) (4)% Pairs 15% CROCS inc Q3 Revenues of $799M ASP 11% Revenues Decline driven largely by curtailment of significant African distributor believed to be diverting goods to the U.S. gray market. Q3 Product Growth Rates (¹) DD+ Clogs 6% Sandals 1. ASP, revenue, and product growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 15% Jibbitz 19#20Q3 FINANCIAL HIGHLIGHTS Crocs Brand Q3 Regional Revenue Highlights Q3 Revenue Growth (¹) 28.6% Asia Pacific CROCS inc 8.2% North America 2.7% EMEALA Q3 DTC Comparable-Sales Growth 38.1% Asia Pacific 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 10.2% North America 22.3% EMEALA 20#21Q3 FINANCIAL HIGHLIGHTS HEYDUDE Q3 Revenue Results Q3 Revenues of $247M Channel Growth vs. PY in CC (¹) 14.6% DTC CROCS inc 1. (19.7)% WHL (8.5)% HEYDUDE Brand 1 T YOY Digital growth of 5.6%(¹) Digital Penetration 35.9% Q3'22 Growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. +570bps 41.6% Q3'23 21#22Q3 FINANCIAL HIGHLIGHTS Q3 Adjusted Gross Margins by Brand(¹) +460bps 62.1% 57.5% il crocs™ (600)bps CROCS inc 48.8% 42.8% Q3'22 Q3'23 Q3'22 Q3'23 Q3'22 Q3'23 CROCS inc HEY DUDE +230bps 55.1% 1. See reconciliation to GAAP equivalents in Appendix. 57.4% va 22#23Q3 FINANCIAL HIGHLIGHTS Best-in-Class Adjusted Operating Margins(¹) CROCS inc 1. See reconciliation to GAAP equivalents in Appendix. AN +430bps 33.1% 37.4% Q3'22 Q3'23 crocs™ (920)bps 29.3% 20.1% Q3'22 Q3'23 HEY DUDE 1 +40bps 27.9% 28.3% Q3'22 Q3'23 CROCS inc 23#24Q3 FINANCIAL HIGHLIGHTS Capital Allocation O • Committed to quickly deleveraging - repaid $940M since the acquisition O O Met our goal to be below 2.0x gross leverage by mid-year 2023 Debt paydown of $90M; Repurchased $150M of shares in Q3 CROCS inc Gross Leverage Ratio 2.25x PF YE 2022 for HEYDUDE 1. Gross leverage ratio calculated consistent with debt covenants. 2.1x PF Q1 2023 for HEYDUDE 1.8x Q2 2023 1.7x Q3 2023 Net Leverage: 1.0x - 1.5x Long Term Target 24#25Q3 FINANCIAL HIGHLIGHTS Healthy Inventory Position CROCS inc $514 $190 $324 Q3 2022 Inventory Balance ($M) 24% YOY decrease $472 $169 $303 YE 2022 Crocs HEYDUDE $390 $111 $279 Q3 2023 25#26Q3 FINANCIAL HIGHLIGHTS FY2023E Guidance (numbers on reported basis, unless otherwise noted) Total Revenue Growth crocs™ Revenue Growth HEY DUDE Reported Revenue Growth Pro Forma Revenue Growth (2) Adjusted Operating Margin(3,4) Adjusted One Time Costs (3,4) Adjusted Tax Rate(3,4) Adjusted Diluted EPS (3,4) Capital Expenditures CROCS inc 1. 2. 3. 4. Prior Guidance 12.5% to 14.5% $4.0 to $4.065B 12% to 13% 14% to 18% -3.5% to 7.5% ~27.5% $35M ~20% $11.83 to $12.22 Current Guidance -10% to 11% $3.905 to $3.940B $165 to $180M -12% to 13% ~4% to 6% ~(4)% to (6)% ~27.0% $60M ~20% $11.55 and $11.85 ($95) to ($125M) $125 to $135M (50)bps +$25M ($40M) to ($45M) Crocs, Inc. expected FY2023 revenue growth provided of approximately 10% to 11% implies expected revenues of $3,905 million to $3,940 million at currency rates as of the end of the latest reported period. Pro forma ("PF") includes HEYDUDE revenues for the period prior to acquisition close (assuming the acquisition had closed on January 1, 2022.) Non-GAAP adjustments include an expected: $60 million of costs primarily related to investments in our distribution centers to support growth and an anticipated non-cash impairment for our corporate headquarters. We expect these adjustments to be fairly balanced across cost of sales and SG&A. See reconciliation to GAAP equivalents in Appendix. ($0.28) to ($0.37) 26#27Q3 FINANCIAL HIGHLIGHTS Q4 2023E Guidance (numbers on reported basis, unless otherwise noted) Total Revenue Growth crocs Revenue Growth HEY DUDE Revenue Growth Adjusted Operating Margin(2) Adjusted Diluted EPS (2) CROCS inc Q4 2023E (4)% to (1)%(¹) 4% to 7% (25)% to (20)% ~21.0% $2.05 to $2.35 1. Crocs Inc. expected revenue growth at currency rates as of the end of the latest reported period. 2. See reconciliation to GAAP equivalents in Appendix. Non-GAAP adjustments include costs primarily related to capital investments to support growth, and to be fairly balanced across COGS and SG&A. 27#28Appendix CROCS inc 28#29APPENDIX Non-GAAP Reconciliation In addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America ("GAAP"), we present "Non-GAAP cost of sales," "Non-GAAP gross profit," "Non-GAAP gross margin," "Non-GAAP gross margin by brand," "Non-GAAP selling, general, and administrative expenses," "Non-GAAP selling, general and administrative expenses as a percent of revenues," "Non-GAAP income from operations," "Non- GAAP operating margin," "Non-GAAP income before income taxes," "Non-GAAP income tax expense (benefit)," "Non-GAAP effective tax rate," "Non- GAAP net income," and "Non-GAAP basic and diluted net income per common share," which are non-GAAP financial measures. We also present future period guidance for "Non-GAAP operating margin," "Non-GAAP operating income," "Non-GAAP effective tax rate," and "Non-GAAP diluted earnings per share." Non-GAAP results exclude the impact of items that management believes affect the comparability or underlying business trends in our condensed consolidated financial statements in the periods presented. We also present certain information related to our current period results of operations through "constant currency," which is a non-GAAP financial measure and should be viewed as a supplement to our results of operations and presentation of reportable segments under GAAP. Constant currency represents current period results that have been retranslated using exchange rates used in the prior year comparative period to enhance the visibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations. Management uses non-GAAP results to assist in comparing business trends from period to period on a consistent basis in communications with the board of directors, stockholders, analysts, and investors concerning our financial performance. We believe that these non-GAAP measures, in addition to corresponding GAAP measures, are useful to investors and other users of our condensed consolidated financial statements as an additional tool for evaluating operating performance and trends. For the three and three and nine months ended September 30, 2023, management believes it is helpful to evaluate our results excluding the impacts of various adjustments relating to special or non-recurring items. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Comparable store status, as included in the DTC comparable sales figures above, is determined on a monthly basis. Comparable store sales include the revenues of stores that have been in operation for more than twelve months. Stores in which selling square footage has changed more than 15% as a result of a remodel, expansion, or reduction are excluded until the thirteenth month in which they have comparable prior year sales. Temporarily closed stores are excluded from the comparable store sales calculation during the month of closure and in the same month in the following year. Location closures in excess of three months are excluded until the thirteenth month post re-opening. E-commerce comparable revenues are based on same site sales period over period. E-commerce sites that are temporarily offline or unable to transact or fulfill orders ("site disruption") are excluded from the comparable sales calculation during the month of site disruption and in the same month in the following year. E-commerce site disruptions in excess of three months are excluded until the thirteenth month after the site has re-opened. CROCS inc 29#30APPENDIX Non-GAAP Reconciliation Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended September 30, 2023 2022 GAAP revenues GAAP cost of sales Distribution centers (¹) HEYDUDE inventory fair value step-up (3) Inventory reserve in Russia Total adjustments Non-GAAP cost of sales GAAP gross profit GAAP gross margin Non-GAAP gross profit Non-GAAP gross margin (2) CROCS inc (in thousands) 1,045,717 $ 464,081 (18,797) (18,797) 445,284 $ 581,636 $ 55.6 % 600,433 $ 57.4 % 985,094 443,792 (2,316) 12 1,025 (1,279) 442,513 541,302 54.9 % 542,581 55.1 % (1) Represents expenses, including expansion costs, duplicate rent costs, and transitional storage costs, primarily related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada. (2) Primarily represents a prior year step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022. (3) Represents the net impact of a prior year inventory reserve expense in our EMEALA segment associated with the shutdown of our direct operations in Russia. 30#31APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Gross Margin Reconciliation by Brand: GAAP Crocs Brand gross margin Non-GAAP adjustments: Distribution centers (¹) Inventory reserve in Russia Non-GAAP Crocs Brand gross margin (2) CROCS inc Three Months Ended September 30, 2023 2022 61.9 % 0.2% - % 62.1 % 57.3 % 0.3 % (0.1)% 57.5 % GAAP HEYDUDE Brand gross margin Non-GAAP adjustments: Distribution centers (¹) Non-GAAP HEYDUDE Brand gross margin Three Months Ended September 30, 2022 2023 35.6 % 7.2 % 42.8 % 48.8 % % 48.8 % (1) Represents expenses, including expansion costs, duplicate rent costs, and transitional storage costs, primarily related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada. (2) Represents the net impact of a prior year inventory reserve expense in our EMEALA segment associated with the shutdown of our direct operations in Russia. 31#32APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP selling, general and administrative expenses and selling, general and administrative expenses as a percent of revenues reconciliation: GAAP revenues (1) (2) (3) (4) GAAP selling, general and administrative expenses Information technology project discontinuation Duplicate headquarters rent (¹) (2) HEYDUDE acquisition and integration costs Impact of shutdown of Russia direct operations (4) Other Total adjustments Non-GAAP selling, general and administrative expenses (3) (5) GAAP selling, general and administrative expenses as a percent of revenues Non-GAAP selling, general and administrative expenses as a percent of revenues CROCS inc Three Months Ended September 30, 2023 2022 1,045,717 307,784 (976) (545) (1,749) (3,270) 304,514 29.4% 29.1% $ (in thousands) 985,094 277,239 (6,863) 40 (2,300) (9,123) 268,116 Nine Months Ended September 30, 28.1 % 27.2% 2023 3,002,250 Represents various costs in the prior year associated with the shutdown of our direct operations in Russia, including severance and lease exit costs and penalties. Includes various restructuring costs, as well as costs associated with the implementation of a new enterprise resource planning system. (5) Non-GAAP selling, general and administrative expenses are presented gross of tax. 852,044 $ (4,119) (3,169) (1,961) (7,357) (16,606) 835,438 28.4 % 27.8 % $ 2022 2,609,823 733,255 (33,205) (5,797) (3,502) (42,504) 690,751 Represents duplicate rent costs associated with our upcoming move to a new headquarters. Represents costs related to the integration of HEYDUDE in the three and nine months ended September 30, 2023 and costs related to the acquisition and integration of HEYDUDE in the three months ended September 30, 2022 and the partial period from the acquisition date of February 17, 2022 through September 30, 2022 (the "Partial Period"). 28.1 % 26.5 % 32#33APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP selling, general and administrative expenses as a percent of revenues reconciliation by Brand: GAAP Crocs Brand selling, general and administrative expenses as a percent of revenues Non-GAAP adjustments(¹) Non-GAAP Crocs Brand selling, general and administrative as a percent of revenues Three Months Ended September 30, 2023 2022 CROCS inc 24.7 % 0.1 % 24.6% (1) Includes various restructuring costs, as well as costs associated with the implementation of a new enterprise resource planning system. 24.4 % - % 24.4 % 33#34APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Income from Operations and Operating Margin Reconciliation: Three Months Ended September 30, 2023 2022 GAAP revenues GAAP income from operations (1) Non-GAAP cost of sales adjustments Non-GAAP selling, general and administrative expenses (2) adjustments Non-GAAP income from operations GAAP operating margin Non-GAAP operating margin $ $ 1,045,717 $ 273,852 $ 18,797 3,270 295,919 26.2% 28.3 % $ (in thousands) 985,094 $ 264,063 1,279 9,123 274,465 26.8 % 27.9 % Nine Months Ended September 30, 2023 2022 $ 3,002,250 827,269 23,664 16,606 867,539 27.6% 28.9 % $ 2,609,823 630,704 67,334 42,504 740,542 24.2% 28.4 % (¹) See 'Non-GAAP cost of sales, gross profit, and gross margin reconciliation' above for more details. (2) See 'Non-GAAP selling, general and administrative expenses and selling, general and administrative expenses as a percent of revenues reconciliation' above for more details. CROCS inc 34#35APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Operating Margin Reconciliation by Brand: Three Months Ended September 30, 2023 2022 GAAP Crocs Brand operating margin Non-GAAP costs of sales adjustments (¹) Non-GAAP SG&A adjustments(²) Non-GAAP Crocs Brand operating margin GAAP HEYDUDE Brand operating margin Non-GAAP costs of sales adjustments(¹) Non-GAAP SG&A adjustments Non-GAAP HEYDUDE Brand operating margin 37.2 % 0.1 % 0.1% 37.4 % 32.9 % 0.2% -% 33.1 % Three Months Ended September 30, 2023 2022 12.9 % 7.2 % - % 20.1 % 29.3 % - % - % 29.3 % (¹) See 'Non-GAAP gross margin by Brand reconciliation' above for more details. (2) See 'Non-GAAP selling, general and administrative expenses as a percent of revenues by Brand reconciliation' above for more details. CROCS inc 35#36APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Income Tax Expense (Benefit) and Effective Tax Rate Reconciliation: Nine Months Ended September 30, Three Months Ended September 30, 2023 2022 2023 2022 GAAP income from operations GAAP income before income taxes (1) Non-GAAP income from operations GAAP non-operating income (expenses): Foreign currency losses, net Interest income Interest expense Other income (expense), net Non-GAAP income before income taxes GAAP income tax expense Tax effect of non-GAAP operating adjustments Impact of intra-entity IP transfers (²) Non-GAAP income tax expense GAAP effective income tax rate Non-GAAP effective income tax rate 273,852 233,405 295,919 (1,770) 506 (39,207) 24 255,472 56,380 5,462 (6,717) 55,125 24.2% 21.6% (in thousands) 264,063 $ 229,575 274,465 (393) 31 (34,142) 16 239,977 60,226 2,751 (8,368) 54,609 26.2% 22.8% $ 827,269 702,413 867,539 (1,622) 1,225 (124,907) 448 742,683 163,433 10,076 (19,233) 154,276 $ 23.3 % 20.8% 630,704 542,939 740,542 (1,115) 219 (86,357) (512) 652,777 140,515 18,789 (18,274) 141,030 25.9 % 21.6% (2) (!)See 'Non-GAAP income from operations and operating margin reconciliation' above for more details. In the fourth quarter of 2020, and subsequently in the fourth quarter of 2021, we made 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 transfers resulted in a step-up in the tax basis of intellectual property rights and correlated increases in foreign deferred tax assets based on the fair value of the transferred intellectual property rights. This adjustment represents the current period impact of these transfers. The prior year adjustment also includes the release of the valuation allowance as a result of a tax law change. CROCS inc 36#37APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Earnings Per Share Reconciliation: Numerator: GAAP net income Non-GAAP cost of sales adjustments Non-GAAP selling, general and administrative expenses adjustments Tax effect of non-GAAP adjustments Non-GAAP net income (1) GAAP net income per common share: Basic Diluted 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 (2) Non-GAAP net income per common share: Basic Diluted $ $ $ $ Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 (in thousands, except per share data) 2022 177,025 18,797 3,270 1,255 200,347 61,143 472 61,615 2.90 2.87 3.28 3.25 $ $ 169,349 $ 1,279 9,123 5,617 185,368 $ 61,693 674 62,367 2.75 2.72 3.00 2.97 $ $ $ $ 538,980 $ 23,664 16,606 9,157 588,407 61,670 610 62,280 8.74 8.65 $ 9.54 $ 9.45 $ 402,424 67,334 42,504 (515) 511,747 61,042 798 61,840 6.59 6.51 8.38 8.28 (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 and selling, general and administrative expenses as a percent of revenues reconciliation' above for more information. CROCS inc 37#38APPENDIX Non-GAAP Reconciliation (Cont'd) Reconciliation of GAAP to Non-GAAP Financial Guidance: Full Year 2023: Non-GAAP operating margin and operating income reconciliation: GAAP operating margin Non-GAAP adjustments, primarily related to investments to support growth Non-GAAP operating margin Non-GAAP effective tax rate reconciliation: GAAP effective tax rate (1) Non-GAAP adjustments, primarily related to amortization of intellectual property Non-GAAP effective tax rate (1)(2) Non-GAAP diluted earnings per share reconciliation: GAAP diluted earnings per share Non-GAAP adjustments, primarily related to investments to support growth and amortization of intellectual (1)(2) property Non-GAAP diluted earnings per share Approximately: 25.5% 1.5% 27.0% 23.0% (3.0)% 20.0% $10.37 to $10.67 $1.18 $11.55 to $11.85 (1) For the full year 2023, we expect to incur approximately $60 million in costs primarily related to investments to support growth and to be fairly balanced across COGS and SG&A. (2) In the fourth quarter of 2020, and subsequently in the fourth quarter of 2021, we made 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. This adjustment represents the amortization of the deferred tax asset related to these intellectual property rights in this period. Non-GAAP Financial Guidance Our forward-looking guidance for consolidated "adjusted operating margin," "adjusted diluted earnings per share", and "net leverage target" represents non-GAAP financial measures that exclude or otherwise have been adjusted for special items from our U.S. GAAP financial statements. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non- recurring. Such adjustments are subjective and involve significant management judgment. While we are able to estimate full year non-GAAP adjustments, we are unable to reconcile forward-looking adjusted measures to their nearest U.S. GAAP measure quarter-by-quarter because we are unable to predict the timing of these adjustments with a reasonable degree of certainty. By their very nature, special and other non-core items are difficult to anticipate with precision because they are generally associated with unexpected and unplanned events that impact our company and its financial results. Therefore, we are unable to provide a reconciliation of these measures for the nce related to the fourth quarter of 2023. CROCS inc 38#39CROCS inc TM