#1CROCS inc TM Investor Presentation June 2023#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, 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 second 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 financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein. 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 ● Business Highlights Update on Select Crocs Brand Growth Drivers HEYDUDE Update • Q1 Financial Highlights Financial Outlook Appendix CROCS inc 3#4Everyone Comfortable In Their Own Shoes CROCS inc Our Vision#5Our Values CROCS inc Delightfully Democratic We celebrate one-of-a-kinds and stand together with all different kinds. Imaginative Innovation We stretch the possibilities of design and creative thinking so you can reach your highest potential. People-Purposed Design We think people-first at every step. We design for everything you do and everywhere you go. Unapologetic Optimism We make a choice every day to have an open mind and look on the bright and colorful side. Inherent Simplicity We know smart doesn't have to mean complicated. So we keep things simple, light, and totally intuitive. Confidently Comfortable We support comfort on every level, because when you're comfortable, you can do anything. 5#6Business Highlights 6#7Business Highlights Crocs is a Proven Growth Company ● ● Entrepreneurial Phase 2002 to 2006 Classic clog is born in 2002 and gains broad popularity for its comfort, utility, and unique look In 2006, completed largest footwear IPO in U.S. history at that time Acquired Jibbitz, increasing personalization CROCS inc TM ● ● ● Overextension 2008 to 2013 Over diversification of product line (e.g., golf shoes and leather boots) and little investment in the iconic clog led to low brand relevance and subpar gross margins Disparate go to market created many subscale geographies Over extension of global retail fleet to 600+ stores in 2013 No cohesive global marketing strategy High cost base (SG&A 47%+ of revenues) ● Announced intention to refine strategy and earnings growth through simplification and focus Shrunk revenue to get to a profitable base Blackstone invested $200M to fund share repurchase and bring in new leadership with industry experience Appointed Andrew Rees as President O 0 Under Rees' leadership, transformed the Crocs brand: Consumer-centric brand strategy to drive relevance O O O O Iconic, focused product offering Focused on clogs, sandals and Jibbitz Introduced seasonally relevant graphics and prints to drive clog purchases Improved gross margin 50% SKU reduction O Transformation & Brand Re-ignition 2014 to 2017 O O O Implemented global brand playbook focusing on driving relevance for iconic Clog Shifted to digital-only marketing for scale and efficiency Leveraged influencers and partnerships and launched first collaboration in 2017 with Christopher Kane O Continued shift to molded product Closed owned manufacturing facilities Flexible SG&A base Cut $80M in fixed expenses, reinvesting a portion back into marketing Reduced store count from 600+ to <400, and focused on profitable outlets Transitioned sub-scale direct markets to distributors ● ● Profitable Growth 2018 to Present 2018 begins a 5 year run of double-digit revenue growth, finishing 2022 with record revenues of $3.6B Relevance for the Crocs brand has increased 34% and consideration has increased 69% Achieved double-digit adjusted operating margin target in 2019 and expanded margin to 28% in 2022 Expanded adj. gross margin for the Crocs brand 510bps supported by shift to molded product and Jibbitz Increased Crocs brand marketing spend from $70M to ~$190M Repurchased ~$1.7B of shares since 2014 at average price of $37.90 per share Outlined growth strategy for the Crocs Brand including: sandals, Asia, digital and product & marketing innovation Announced commitment to net zero carbon emissions Acquired casual footwear brand HEYDUDE HEY DUDE 7#8Business Highlights Market-Leading Total Shareholder Return $1,250 $1,000 $750 $500 $250 December 31, 2017 Value of $100 Invested December 31, 2017 CROCS inc 54% five-year annualized TSR December 31, 2018 Crocs, Inc. December 31, 2019 Dow Jones US Footwear Index December 31, 2020 Nasdaq Composite Index December 31, 2021 S&P 500 December 31, 2022 Crocs, Inc. 5-year annualized TSR would have made it the #2 best performing stock had it been in the S&P 500 8#9Business Highlights Our exceptional first quarter results are a testament to the strength of our brands. The Crocs Brand grew 19.0% as we see a strong consumer response to our new clog and sandal introductions. The HEYDUDE brand is gaining momentum and experienced outstanding DTC growth. We are raising our 2023 revenue growth outlook to now be 11% to 14% resulting in revenues of approximately $4.0 billion reflecting our confidence in our ability to continue to gain market share, deliver best-in-class profitability, and generate strong cash flow. CROCS inc Andrew Rees, CEO Source: Q1 earnings release on April 27, 2023. All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein.#10Business Highlights Q1 2023 Highlights • Revenues of $884 million, +36% CC(1), grew in all brands, regions and channels ● ● ● ● ● ● O O O Crocs Brand revenues +22% CC(1) and DTC comparable sales growth +19% O Crocs Brand North America revenues +10% with 12% DTC comparable sales growth and 6% Wholesale CC growth Crocs Brand sandals revenues increased 65% and China revenues rose in excess of 110% CC(¹) HEYDUDE Brand revenues were $235 million, increasing 15% on a pro forma basis (2) Adjusted gross margins of 54%(3) Adjusted operating margins of 28% (³) Adjusted diluted EPS +27% to $2.61 per share (³) Piper Sandler's Spring 2023 Taking Stock with Teens Survey: Crocs ranked #6 and HEYDUDE ranked #8 For the third consecutive year, Crocs was named as one of the top 10 Most Innovative Brands by Fast Company Published 2nd annual ESG report inclusive of HEYDUDE in April CROCS inc 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 2. Revenue growth on a Pro forma basis, which includes HEYDUDE for the period prior to acquisition close (assuming the acquisition had closed January 1, 2022). See reconciliation to GAAP equivalents in Appendix. 3. 10#11Business Highlights Crocs, Inc. Investment Highlights CROCS inc • A Global Leader in Casual Footwear with $160B Total Addressable Market • Two Iconic, High-Growth Scale Brands Aligned to Long-Term Consumer Trends • Diversified Sources of Growth Across Brands, Categories, Geographies and Channels Industry-Leading Margins and Cash Flow Generation Allowing to Deleverage Quickly and then Return Capital to Shareholders • Best-in-Class Management Team with Track Record of Delivering Financial Targets and Exceptional TSR 11#12Update on Select Crocs Brand Growth Drivers 12#13TTM Q1 2023 Revenue Breakdown Update on Select Crocs Brand Growth Drivers Diversified Sources of Growth Geography(¹) EMEALA 20% Asia Pacific 19% CROCS inc HEYDUDE 27% O 1. 2. Brand O North America 61% Crocs 73% Other Casual 45% Digital Penetration (2) O O Product Penetration Digital 37% Clogs 55% WHL 56% Note: Data is for trailing twelve months ended March 31, 2023. Geography is for Crocs Brand only. Digital sales include crocs.com, heydude.com, third-party marketplaces (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando). Channel O DTC 44% 13#14Update on Select Crocs Brand Growth Drivers Importance of Sandals to the Crocs Brand ● ● ● $30B global footwear category Our molded technologies, accessible price points, and strong go-to-market should allow us to compete effectively Additional entry point for the Crocs Brand High purchase frequency Crocs Brand sandal consideration is on par with that of clogs Crocs has a sizeable business, with 2022 sandal revenues of ~$310M CROCS inc 14#15Update on Select Crocs Brand Growth Drivers Expect Strong Sandal Growth in 2023 We expect strong sandal growth for the Crocs Brand in 2023 due to planned newness, such as: Additional height New uppers in popular Brooklyn style Echo Slide ● Significant increase in sandal-specific marketing Strong brand trajectory in important sandal markets (e.g., India, Southeast Asia) CROCS inc Crocs Brand Sandal Revenues ($M) Est. ~29% Growth* ~$310 2022 TTM Q1 2023 ~$400 All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein. 2023E Q1 2023 +65% YoY Revenue Growth 15#16Update on Select Crocs Brand Growth Drivers Focus on Four Categories to Drive Growth Everyday Broad-reaching, iconic franchises with opening price points, personalization and longer lifecycles S CROCS inc Style Trend-driven with extended price points and shorter lifecycles with a focus on females Street / Sport Culturally relevant, rooted in street style and innovation with a focus on him, inclusive of her Adventure Functional design leveraging Crocs brand heritage with extended price points and a focus on the full family 16#17Update on Select Crocs Brand Growth Drivers Growing Crocs Brand Momentum Internationally $279 FY20 CC GROWTH(1) CROCS inc Asia Pacific Revenues 19%CAGR $350 FY21 +22% $474 FY22 +47% $518 Q1'23 TTM +52% $275 FY20 EMEALA Revenues 25%CAGR $409 FY21 +46% China revenues grew over 110% CC(¹) in the first quarter $541 FY22 +47% 1. Revenue dollars in millions. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. $568 Q1'23 TTM +37% 17#18Update on Select Crocs Brand Growth Drivers Crocs Product & Marketing Innovation In 2023 we expect: • Record new product introductions ● • Strong pipeline of 60+ global brand partnerships across a healthy mix of celebrities, mega brands and licenses of which ~25% will be regionally led • Invest a record amount of marketing - over $200M - to drive relevance, amplify our products and engage and acquire customers CROCS inc INDEPENDENT Extras > IndyBest > Fashion & Beauty The Minecraft Crocs are so gloriously ugly, we're in love with them The limited-edition clogs and slides are available to buy starting today Alex Lee Thursday 16 February 2023 18:18 crocs crocs - Q V 10,068 likes crocs It's Mr. Steal Yo Crocs Source: independent.co.uk; and Crocs Instagram. Note: All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein. : B 18#19Update on Select Crocs Brand Growth Drivers Crocs Marketing Highlights Select Partnerships ● ● Sports licensing with NBA and MLB Hello Kitty & Friends • Minecraft Melting Sadness (China) • Western Hydro Research ● ● Select Marketing Campaigns & Media • New York Times feature emphasizing continued momentum post-pandemic • Global Fuzz campaign launch • Echo campaign launch to engage Sport ● Lifestyle • Global Platform Slide + Classic Sandals campaign launch to ignite sandals season • Crush collection featured in Vogue (S. Korea) CROCS inc Source: Crocs.com, WWD.com, NYTimes.com, NBATM/Crocs, Vogue.com, SHOW YOUR SOFT SIDE Warm It Up in the Fuzz Collection Shop Fuzz Collection The New York Times People Started Buying Crocs During the Pandemic. They Can't Stop. ADD SESSLER EXIT BQ ch ECHO THE STREET 19#20HEYDUDE Update 20#21HEYDUDE Update Progress through Q1 2023 2022 ● ● ● ● ● Acquisition exceeded expectations with brand revenues of nearly $1B(¹), EPS accretion and significant debt paydown in the first year ● Staffed the entire leadership team and hired over 150 roles Stabilized and expanded the manufacturing footprint Q1 2023 Q1 Revenues of $235M +15% on top of 70% PF growth in 2022(¹) Quickly penetrated Crocs' strategic accounts, which now represent approximately 50% of HEYDUDE wholesale revenues Expanded the line introducing several new styles - Sirocco, Cody, Conway and Sunapee Developed a business systems roadmap Expanded distribution capabilities to handle the immediate throughput needs • International expansion on track with testing in direct and distributor markets; launched e-com and Amazon in select markets in April CROCS inc 1. DUDE THE HEYDUDES YOU'RE WEARING TODAY THE HEYDUDES YOU BOUGHT LAST WEEK DUDE HEY HEY THE HEYDUDES YOU'RE BUYING NEXT Revenue growth on a Pro forma basis, which includes HEYDUDE for the period prior to acquisition close (assuming the acquisition had closed January 1, 2022) was $986M. On a reported basis, revenues for 2022 were $896M; this does not include period of time prior to closing of HEYDUDE acquisition on February 17, 2022. 21#22HEYDUDE Update HEYDUDE Wholesale Transformation 2022 Wholesale Revenues(¹) $163 ~ $70 ~ $90 Q2 2022 $182 ~ $60 ~ $120 Q3 2022 Comp Non-Comp $574 ~ $220 ~ $355 FY 2022 2-Year Total Brand Revenue Growth (2) 108% Q1 2023A ~93% FY 2023E In 2022, we began to open strategic US Wholesale accounts and eliminate non-strategic accounts. This will result in challenging Wholesale comparables in 2023. However, 2-year brand growth remains strong 1. Non-comp includes pipeline fill revenue from strategic accounts that is one-time in nature as well as revenue from non-strategic accounts that we are/will eliminate. 2. FY2023E based on mid-point of guidance. All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein#23HEYDUDE Update Strong Sell Out and Exceptional Brand Health Q1 2023 Sell Out Increased Strong Double-Digits(¹) 143% Wholesale Sell Out - Strategic Accounts 1. 2. 41% DTC Sell Out Wholesale Sell Out - Non- Strategic Accounts Exceptional Brand Health (2) • Best-in-class NPS that is 50% higher than competition • #1 casual brand for US men and women. • #7 favorite footwear brands for US teens ● Top growth brand in US Wholesale in 2022, up 255% Average of 4 pairs per closet, 2x higher than competition Increasing brand awareness Incorporated into the guidance provided on the Q1 2023 earnings call was an expectation that Wholesale growth would be negative in Q2 and Q3 while DTC will outperform Note: All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein Sell out revenue for wholesale as reported by The NPD Group and SPS. DTC comparable sales for HEYDUDE as reported in Q1 earnings release. Source: LEK Brand Heat Index. Piper Sandler Spring 2023 Taking Stock with Teens Survey. The NPD Group/Retail Tracking Service, Annual 2022. Internal brand studies.#24HEYDUDE Update We are committed to long-term sustainable growth and success of the HEYDUDE brand Building relationships with large, strong key accounts Eliminating non-strategic accounts Cleaning up Amazon marketplace Implementing MAP pricing Reducing digital selling rights to key accounts Improved account segmentation Selective product introductions CROCS inc HEY DUDE X MOSSY OAK OUDE OP 24#25Q1 Financial Highlights 25#26Q1 Financial Highlights Q1 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. Q1 $884 53.9% 54.2% 26.3% 26.6% 27.9% $2.39 $2.61 B/(W) vs. PY +36%(1) +470 bp 30 bp 100 bp 860 bp 130 bp +101% +27% Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. Revenue growth does not include period of time prior to closing of HEYDUDE acquisition on February 17, 2022. See reconciliation to GAAP equivalents in Appendix. 26#27Q1 Financial Highlights Q1 2023 Revenue Growth CROCS inc 1. 2. 3. $884M Crocs, Inc. +34% / 36% CC (1) +12% Crocs Brand Digital Sales CC Growth (1.2) $649M Crocs Brand +19% / 22% CC(¹) +19% Crocs Brand DTC Comp Growth (3) $235M HEYDUDE Brand +106% CC / +15% PF(¹) 30% Digital Penetration (2) Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. Pro forma ("PF") includes HEYDUDE revenues for the period prior to acquisition close (assuming the acquisition had closed on January 1, 2022). Digital sales include Crocs.com, heydude.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando). See further details in Appendix for DTC comparable sales definition. 27#28Q1 Financial Highlights Q1 Channel Breakdown CROCS inc WHL 65% CROCS inc DTC 35% crocs™ WHL 63% DTC 37% 1. Digital sales include Crocs.com, third-party market places (e.g. Tmall), and e-tailers (e.g. Amazon, Zappos, Zalando) WHL 71% HEY DUDE DTC 29% 28#29Q1 Financial Highlights Crocs Brand Q1 Highlights • Revenues +22% CC vs. PY O ● O North America DTC comparable sales +12% Asia Pacific +55% CC vs. PY • EMEALA +25% CC vs. PY O • Crocs ranked #6 preferred footwear brand for teens, equivalent to Spring '22, in Piper Sandler's Spring 2023 Taking Stock with Teens Survey Adj. Gross Margin increased 140 bps driven a significant improvement in freight of nearly 600 basis points, including ~450 bps of reduced air freight partially offset by ~140 bps of higher end of season clearance and ~70 bps of inflationary cost pressures. Currency negatively impacted gross margin by 115 bps. Revenues Adj. Gross Margin(2) Operating Margin CROCS inc 1. 2. Q1'2023 $649M 56.3% 33.6% B/(W) vs. PY +21.6%(1) 140 bp 350 bp 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. 29#30Q1 Financial Highlights HEYDUDE Brand Q1 Highlights • Revenues of $235M, +106% CC vs PY/ +15% on a PF basis(¹) • HEYDUDE ranked #1 in casual footwear for men and women in L.E.K. report on footwear and apparel brand heat • HEYDUDE ranked #8 preferred footwear brand for teens, up from Spring '22, in Piper Sandler's Spring 2023 Taking Stock with Teens Survey Diversifying silhouettes with Karina and Sirocco sneakers as top selling styles on heydude.com International test and learn has begun with first e-commerce and Amazon orders shipped from the Netherlands distribution center in early April • Two significant initiatives - ERP implementation and a new distribution center in Las Vegas - both expected to be complete towards year end Revenue Adj. Gross Margin(2) Operating Margin(3) CROCS inc 1. 2. 3. Q1'2023 $235M 49.6% 32.6% B/(W) vs. PY +105.7% (1) (30) bp 1,890 bp prants & Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. Pro forma ("PF") includes HEYDUDE revenues for the period prior to acquisition close (assuming the acquisition had closed on January 1, 2022.) See reconciliation to GAAP equivalents in Appendix. Prior year operating margin included $28 million costs associated with the write-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022. 30#31Financial Outlook 31#32Financial Outlook 2023E Guidance (numbers on reported basis, unless otherwise noted) Total Revenue Growth crocs™ Revenue Growth HEY DUDE Reported Revenue Growth Pro Forma Revenue Growth Adjusted Operating Margin (3) Adjusted One Time Costs (³) Adjusted Tax Rate (³) Adjusted Diluted EPS (3) Capital Expenditures CROCS inc Q2 2023E 6% to 9% 1 1 1 26.0% $2.83 to $2.98 FY 2023E 11% to 14% (1) 7% to 9% (1) Mid-20% Mid-teens(2) 26.0% to 27.0% $30M ~20% $11.17 to $11.73 $165 to $180M Note: All financial guidance and expectations in this presentation are as of our April 27, 2023 earnings call and are not being updated or reaffirmed herein. See reconciliation of Non-GAAP to GAAP equivalents in Appendix. 1. Crocs Inc. expected revenue growth at current currency rates, which is a Non-GAAP Financial Measure. See further details in Appendix. For FY 2023E, expected revenue growth of approximately 11% to 14% implies expected revenues of $3,945 million to $4,045 million at current currency rates. 2. Assuming that the midpoint of "mid-20s" reported growth is 25% would imply 13.6% growth on a pro forma basis. 3. Non-GAAP adjustments include an expected: $30 million of costs primarily related to capital investments to support growth, and to be fairly balanced across COGS and SG&A. 32#33Financial Outlook Capital Allocation Priorities CROCS inc Business Investment Invest to support long- term, profitable growth Deleverage to <2.0x Gross Leverage by June 30, 2023 Committed to working towards deleveraging quickly Balance Deleveraging and Share Repurchase Long-term target of 1.0-1.5x net leverage 33#34Financial Outlook Deleveraging Remains on Track O • Committed to quickly deleveraging O Forecasting to be below. 2.0x adjusted gross leverage by June 30, 2023 • We expect to resume share repurchases in Q3 • We will methodically O balance debt repayment with share repurchase Net Debt / Adj. EBITDA (2) CROCS inc Gross Debt / Adjusted EBITDA Outlook(¹) 2. 1.1x 3.1x 2.9x PF YE 2021 for HEYDUDE 2.1x 2.0x PF Q1 2023 for HEYDUDE <2.0x 0.8x YE 2021 1. Assumes excess free cash flow used to repay borrowings. Gross Debt / Adjusted EBITDA calculated as: Total Gross Debt / Trailing Twelve Months ("TTM") Adjusted EBITDA. Adjusted EBITDA calculated as Adjusted Operating Income plus depreciation and amortization. Please refer to Appendix for definition and Non-GAAP reconciliation. a. b. Pro forma ("PF") includes HEYDUDE for the period prior to acquisition close (assuming the acquisition had closed on the first day of such trailing twelve month period). Net Debt / Adjusted EBITDA calculated as: (Total Gross Debt - Cash and Cash Equivalents) / TTM Adjusted EBITDA, as calculated above. Long Term Target 1.0x - 1.5x net leverage Mid-Year 2023E 34#35Appendix 35#36Appendix 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 selling, general and administrative expenses by brand," Non-GAAP selling, general and administrative expenses as a percent of revenues by brand," "Non-GAAP income from operations," "Non-GAAP income from operations by brand," "Non-GAAP operating margin," "Non-GAAP operating margin by brand," "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 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 months ended March 31, 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, 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 36#37Appendix Non-GAAP Reconciliation Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Three Months Ended March 31, 2023 2022 GAAP revenues GAAP cost of sales Distribution centers (¹) HEYDUDE inventory fair value step-up (2) Inventory reserve in Russia (3) Total adjustments Non-GAAP cost of sales GAAP gross profit GAAP gross margin Non-GAAP gross profit Non-GAAP gross margin (in thousands) $ 884,166 407,796 (3,281) (3,281) 404,515 476,370 53.9 % 479,651 $ 54.2% 660,148 335,224 (1,191) (27,927) (1,800) (30,918) 304,306 324,924 49.2 % 355,842 53.9 % (1) Represents expenses, including expansion costs and duplicate rent costs, related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada. (2) Primarily represents a 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 an inventory reserve expense in our EMEALA segment associated with the continued shutdown of our direct operations in Russia. CROCS inc 37#38Appendix 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 GAAP selling, general and administrative expenses Information technology project discontinuation HEYDUDE acquisition and integration costs (1) Duplicate headquarters rent (2) Bad debt impact in Russia (3) Other (4) Total adjustments Non-GAAP selling, general and administrative expenses (5) GAAP selling, general and administrative expenses as a percent of revenues Non-GAAP selling, general and administrative expenses as a percent of revenues Three Months Ended March 31, 2023 2022 (in thousands) 884,166 $ 241,442 (4,119) (1,286) (1,067) (2,360) (8,832) 232,610 27.3% 26.3% $ 660,148 206,247 (20,601) (5,267) (25,868) 180,379 31.2% 27.3% (1) Represents costs related to the integration of HEYDUDE in the three months ended March 31, 2023 and costs related to the acquisition of HEYDUDE in the three months ended March 31, 2022. (2) Represents duplicate rent costs associated with our upcoming move to a new headquarters. (3) Represents prior year bad debt expense associated with the impact of the war between Russia and Ukraine on wholesale partners in Russia. (4) 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. CROCS inc 38#39Appendix Non-GAAP Reconciliation (Cont'd) Non-GAAP Income from Operations and Operating Margin Reconciliation: Three Months Ended March 31, 2023 2022 GAAP revenues GAAP income from operations Non-GAAP cost of sales adjustments (1) Non-GAAP selling, general and administrative expenses adjustments (²) Non-GAAP income from operations $ GAAP operating margin Non-GAAP operating margin (in thousands) $ 884,166 234,928 3,281 8,832 247,041 $ $ 26.6 % 27.9 % 660,148 118,677 30,918 25,868 175,463 18.0% 26.6 % 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 39#40Appendix Non-GAAP Reconciliation (Cont'd) Non-GAAP Income Tax Expense (Benefit) and Effective Tax Rate Reconciliation: Three Months Ended March 31, 2023 2022 GAAP income from operations GAAP income before income taxes Non-GAAP income from operations (1) GAAP non-operating income (expenses): Foreign currency gains (losses), net Interest income Interest expense Other 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 (in thousands) 234,928 191,766 247,041 (403) 171 (42,637) (293) 203,879 42,223 3,070 (4,821) 40,472 22.0% 19.9% 118,677 99,060 175,463 480 102 (19,252) (947) 155,846 26,300 7,622 (3,107) 30,815 26.5% 19.8% (1) See 'Non-GAAP income from operations and operating margin reconciliation' above for more details. (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. 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 40#41Appendix Non-GAAP Reconciliation (Cont'd) 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) Tax effect of non-GAAP adjustments Non-GAAP net income 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 GAAP net income per common share: Basic Diluted Non-GAAP net income per common share: Basic Diluted Three Months Ended March 31, 2023 2022 (in thousands, except per share data) 149,543 $ 3,281 8,832 1,751 163,407 61,836 793 62,629 2.42 2.39 2.64 $ 2.61 $ 72,760 30,918 25,868 (4,515 125,031 59,823 1,073 60,896 1.22 1.19 2.09 2.05 $ (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 41#42Appendix 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 capital investments to support growth (¹) Non-GAAP operating margin Non-GAAP effective tax rate reconciliation: GAAP effective tax rate Non-GAAP adjustments, primarily related to amortization of intellectual property (1)(2) Non-GAAP effective tax rate Non-GAAP diluted earnings per share reconciliation: GAAP diluted earnings per share Non-GAAP adjustments, primarily related to capital investments to support growth and amortization of intellectual property (1)(2) Non-GAAP diluted earnings per share Approximately: 25% to 26% 1% 26% to 27% Non-GAAP Financial Guidance 23% (3)% 20% $10.70 to $11.26 $0.47 $11.17 to $11.73 (1) For the full year 2023, we expect to incur approximately $30 million in costs primarily related to capital 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. Our forward-looking guidance for consolidated "adjusted operating margin," and "adjusted diluted earnings per share" 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 guidance related to the second quarter of 2023. CROCS inc 42#43Appendix 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 (2) Non-GAAP Crocs Brand gross margin Three Months Ended March 31, CROCS inc 2023 55.8 % 0.5 % - % 56.3 % 2022 49.2 % 0.2 % 0.3 % 54.9 % GAAP HEYDUDE Brand gross margin Non-GAAP adjustments: Inventory fair value step-up (3) Non-GAAP HEYDUDE Brand gross margin Three Months Ended March 31, (1) Represents expenses, including expansion costs and duplicate rent costs, primarily related to our distribution centers in Dayton, Ohio. (2) Represents the net impact of an inventory reserve expense in our EMEALA segment associated with the continued shutdown of our direct operations in Russia. 2023 49.6 % % 49.6 % 2022 25.6 % 24.3% 49.9 % 43#44CROCS inc TM