#1CROCS inc TM Q2 2023 Investor Presentation crocs#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 third 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 July 27, 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 Q2 Highlights Q2 Financial Review Appendix CROCS inc merkin 3#4Q2 Highlights CROCS inc 4#5Q2 HIGHLIGHTS CROCS inc We achieved record quarterly revenues of over $1 billion, representing growth of 12.0% on a constant currency basis to prior year. Both the Crocs and HEYDUDE brands continue to gain share and bring in new consumers with our comfortable offerings, as evidenced by DTC growth of 26.0% in the second quarter. We continue to invest behind our strategic priorities that are driving profitable growth. 11 - Andrew Rees, CEO LO 5#6Q2 HIGHLIGHTS Q2 2023 Highlights • Revenues of $1,072 million, +12% CC (¹) O • Crocs Brand revenues of $833M, +15% CC (¹) Asia revenues up +39% CC(1) ● ■ DTC comparable sales growth +20% ▪ North America revenues +13% CC(1¹) driven by sandals and new product introductions HEYDUDE Brand revenues of $239M, +3% CC(¹) • DTC growth of +30% CC(¹) Digital growth of +37% CC (1) Adjusted diluted EPS +11% to $3.59 per share (2) O ■ • Gross leverage was 1.8x at quarter end, allowing us to repurchase $50M of shares in July • Crocs, Inc. was named to the Time 100 Most Influential Companies of 2023 CROCS inc 1. 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. 2. AND Kuta 6#7Q2 HIGHLIGHTS Diversifying the Crocs Clog Silhouette BAAD Echo CROCS inc Dylan Siren 7#8Q2 HIGHLIGHTS Importance of Sandals to the Crocs Brand ● ● • High purchase frequency Crocs Brand sandal consideration is on par with that of clogs ● $30B global footwear category Our molded technologies, accessible price points, and strong go-to-market allow us to compete effectively Additional entry point for the Crocs Brand ● Crocs has a sizeable business, with 2022 sandal revenues of ~$310M We expect sandal revenues to grow 29% to ~$400M in 2023 CROCS inc crocs 8#9Q2 HIGHLIGHTS Recent Crocs Collaborations TACO BELL X crocs CROCS inc en ON 624 IM SATISFY Crocs crocs SALEHE BEMBURY. 11 pollex E 9#10Q2 HIGHLIGHTS Asia is an Important Driver of Long-Term Growth In Asia, growth was broad-based with strong brand momentum throughout the region including China, Australia, South Korea and Southeast Asia. China revenues grew triple-digits in the second 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. $567 Q2 2023 TTM +47% 10#11Q2 HIGHLIGHTS Crocs Brand China Update Letsu COME AS YOU ARE CROCS inc 12 ED 起 CROCS 吗 crocs™ CROCS 全球时尚代言人: 白敬亭 Insta Bai Jingting YOUR SUMMER YOUR CROCS - CROCS YOUR SUMMER YOUR CROCS 13 Spans 周雨彤 CROCS 全球魅力代言人 & Me crocs Zhou Yutong Crocs x Labelhood #1 in sales on Douyin during Mid-Season Festival #2 in sales of casual footwear on Tmall during Mid-Season Festival 11#12Q2 HIGHLIGHTS Exceptional HEYDUDE DTC Growth Q2 Revenue Growth(¹) 30% DTC CROCS inc 1. 37% Digital DUDE Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. JUD LUD DUDE DUDE 12#13Q2 HIGHLIGHTS Creating Excitement with New Product Introductions CROCS inc Americana 1925 SOLBERTE FOR TARANTITLESMA FLISEREDEYDERE! Washed Canvas Funk Sirocco MARKE 13#14Q2 HIGHLIGHTS Driving Increased Brand Awareness Mossy Oak HEY DUDE DUBE CROCS inc MOSSY OAK WXX 1 T Back to Campus SEC ALLFLYTHE E 14#15Q2 HIGHLIGHTS HEYDUDE Wholesale Transformation In 2022, we began to open strategic US Wholesale accounts and eliminate non-strategic accounts. This will result in challenging Wholesale comparables in 2023. However, 2-year brand growth remains strong. CROCS inc 123 2022 Wholesale Revenues(¹) ($M) -$160 $70 $90 Q2 2022 -$180 $60 $120 Q3 2022 Comp -$140 $50 $90 Q4 2022 Non-Comp -$575 $220 $355 FY 2022 2-Year Total Brand Revenue Growth (2,3) 102% Q2 2023A 1. Non-comp includes pipeline fill revenue from strategic accounts that is one-time in nature as well as revenue from non-strategic accounts that we are/will eliminate. 2. Pro forma ("PF") includes HEYDUDE revenues for the period prior to acquisition close (assuming the acquisition had closed on January 1, 2021.) 3. FY2023E based on mid-point of guidance. ~ 80% FY 2023E 15#16Q2 HIGHLIGHTS Strong Sell Out and Exceptional Brand Health Q2 2023 Sell Out Increased Strong Double-Digits (¹) 86% Wholesale Sell Out - Strategic Accounts CROCS inc 30% DTC Sell Out (20)% Wholesale Sell Out - Non- Strategic Accounts 27% Total HEYDUDE Sell Out Exceptional Brand Health (2) Best-in-class NPS of 71, which is 50% higher than competition • #1 casual brand for US men and women #7 favorite footwear brands for US teens Top growth brand in US Wholesale in 2022, up 255% per Circana (formerly NPD) ● ● ● HEYDUDE moved to #8 brand in Q2 in Circana (formerly NPD), up from #15 brand last year Average 4 pairs per closet, 2x higher than competition Increasing brand awareness We estimate that HEYDUDE sell out grew ~27% during Q2 1. Sell out revenue for wholesale based on SPS and excludes gray market sales. DTC growth on YoY reported basis. 2. Source: LEK Brand Heat Index. Piper Sandler Spring 2023 Taking Stock with Teens Survey. The NPD Group/Retail Tracking Service, Annual 2022. Internal brand studies. 16#17Q2 HIGHLIGHTS Digital-First Approach for Both Brands Q2 Digital Revenue Growth(¹) 17% crocs™ CROCS inc 37% HEY, DUDE 21% CROCS inc 1 T Q2 Digital Share of Revenue 38% crocs™ 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 42% HEY DUDE 39% CROCS inc 17#18Q2 Financial Review CROCS inc 18#19Q2 FINANCIAL HIGHLIGHTS Q2 2023 Financial Highlights Revenues ($M) Gross Margin Adjusted Gross Margin ¹2 Adjusted SG&A as % of Revenue (2) Operating Margin Adjusted Operating Margin(²) Diluted EPS Adjusted Diluted EPS (2) CROCS inc 1. 2. Q2 $1,072 57.9% 58.1% 27.8% 29.7% 30.3% $3.39 $3.59 B/(W) vs. PY +12%(1) +630 bp +290 bp (270) bp +400 bp +20 bp +31% +11% 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. 19#20Q2 FINANCIAL HIGHLIGHTS Diversified Sources of Growth TTM Q2 2023 Revenue Breakdown 40% of Crocs Brand TTM sales were from International markets CROCS inc Brand HEYDUDE 26% O Crocs 74% Digital Penetration (¹) O Digital 38% Asia Pacific 15% Note: Data is for trailing twelve months ended June 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 16% Geography WHL 54% O Channel North America 69% DTC 46% 20#21Q2 FINANCIAL HIGHLIGHTS Crocs Brand Q2 Revenue Highlights Q2 Revenues of $833M Q2 Revenue Driver Growth Rates (¹) 2% Pairs CROCS inc 13% ASP 15% Revenues Q2 Product Growth Rates (¹) DD+ Clogs 34% Sandals 1. ASP, revenue, and product growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 13% Jibbitz 21#22Q2 FINANCIAL HIGHLIGHTS Crocs Brand Q2 Regional Revenue Highlights Q2 Revenue Growth (¹) 39.0% Asia Pacific CROCS inc 12.5% North America (1.4)% EMEALA 1 T Q2 DTC Comparable Sales Growth 40% Asia Pacific 1. Revenue growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. 13% North America 39% EMEALA 22#23Q2 FINANCIAL HIGHLIGHTS HEYDUDE Q2 Revenue Highlights Q2 Revenues of $239M Channel Growth vs. PY in CC (¹) 29.7% DTC CROCS inc 1. (8.5)% WHL 2.9% HEYDUDE Brand 1 T YOY Digital growth of 36.6% (¹) Digital Penetration 31.5% Q2 2022 Growth on a constant currency basis, which is a Non-GAAP Financial Measure. See further details in Appendix. +1,030bps 41.8% Q2 2023 23#24Q2 FINANCIAL HIGHLIGHTS Adjusted Gross Margins +410bps 57.9% 62.0% crocs™ CROCS inc Obps Q2'22 Q2'23 Q2'22 Q2'23 47.1% 47.1% HEY DUDE +290bps 55.2% 58.1% Q2'22 Q2'23 CROCS inc 24#25Q2 FINANCIAL HIGHLIGHTS Best-in-Class Adjusted Operating Margins weny CROCS inc +350bps 34.9% 38.4% 1 crocs™ 1 (500bps) 32.6% 27.6% 1 HEY DUDE +20bps Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 CROCS inc 30.1% 30.3% 25#26O • Committed to quickly deleveraging - repaid $850M since the acquisition O Q2 FINANCIAL HIGHLIGHTS Rapid Deleveraging O Met our goal to be below 2.0x gross leverage by mid-year 2023 Share repurchases resumed in Q3 2023 Net Debt / Adj. EBITDA² (2) CROCS inc Gross Leverage (¹) 1. 1.1x 0.8x YE 2021 3.1x 2.9x PF YE 2021 for HEYDUDE 2.1x 2.0x PF Q1 2023 for HEYDUDE 1.8x 1.7x Q2 2023 Long Term Target: 1.0x - 1.5x net leverage Long Term Gross Leverage is calculated as: Total Gross Debt / Trailing Twelve Months ("TTM") Adjusted EBITDA. a. Adjusted EBITDA calculated as Adjusted Operating Income plus depreciation and amortization. Please refer to Appendix for definition and Non-GAAP reconciliation. 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). 2. Net Debt / Adjusted EBITDA calculated as: (Total Gross Debt - Cash and Cash Equivalents) / TTM Adjusted EBITDA, as calculated above. 26#27Q2 FINANCIAL HIGHLIGHTS Healthy Inventory Position CROCS inc $502 $167 $335 Q2 2022 Inventory Balance ($M) 13.0% YOY decrease $472 $169 $303 YE 2022 Crocs HEYDUDE $436 $130 $307 Q2 2023 27#28Q2 FINANCIAL HIGHLIGHTS FY2023E Guidance (numbers on reported basis, unless otherwise noted) Total Revenue Growth crocs HEY DUDE Revenue Growth Reported Revenue Growth Pro Forma Revenue Growth (2) Adjusted Operating Margin(3.4) Adjusted One Time Costs Adjusted Tax Rate (3,4) Adjusted Diluted EPS (3,4) Capital Expenditures CROCS inc 1. 2. 3. 4. Prior Guidance 11% to 14% 7% to 9% Mid-20% Mid-teens 26.0% to 27.0% $30M ~20% $11.17 to $11.73 $165 to $180M Current Guidance 12.5% to 14.5%(¹) 12% to 13% 14% to 18% -3.5% to 7.5% ~27.5% $35M ~20% $11.83 to $12.22 $165 to $180M B/(W) Non-GAAP adjustments include an expected: $35 million of costs primarily related to capital investments to support growth, and to be fairly balanced across COGS and SG&A. See reconciliation to GAAP equivalents in Appendix. +0.5% to 1.5% +4% to 5% +0.5% to 1.5% ($5M) +$0.49 to $0.66 Crocs, Inc. expected FY2023 revenue growth of approximately 12.5% to 14.5% implies expected revenues of $4,000 million to $4,065 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.) For the prior guidance, assuming that the midpoint of "mid-20s" reported growth is 25% would imply 13.6% growth on a pro forma basis. 28#29Q2 FINANCIAL HIGHLIGHTS Q3 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 Q3 2023E 3% to 5%(¹) 1 ~27.0% $3.07 to $3.15 1. Crocs Inc. expected revenue growth at currency rates as of the end of the latest reported period. 2. Non-GAAP adjustments include costs primarily related to capital investments to support growth, and to be fairly balanced across COGS and SG&A. 29#30Q&A CROCS inc 30#31Appendix CROCS inc 31#32APPENDIX 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 and six months ended June 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, 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 32#33APPENDIX Non-GAAP Reconciliation Non-GAAP Cost of Sales, Gross Profit, and Gross Margin Reconciliation: Six Months Ended June 30, 2023 2022 (1) (2) (3) 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) Three Months Ended June 30, 2023 2022 1,072,367 451,060 (1,586) $ (1,586) 449,474 $ 621,307 $ 57.9 % 622,893 $ 58.1 % (in thousands) 964,581 466,848 (1,389) (34,323) 575 (35,137) 431,711 497,733 51.6% $ 532,870 $ 55.2 % 1,956,533 $ 858,856 $ (4,867) (4,867) 853,989 $ 1,097,677 $ 56.1% 1,102,544 $ 56.4% 1,624,729 802,072 (2,580) (62,250) (1,225) (66,055) 736,017 822,657 50.6 % 888,712 54.7 % Represents expenses, including expansion costs and duplicate rent costs, related to our distribution centers in Dayton, Ohio and Las Vegas, Nevada. Represents a prior year step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022. Represents a prior year inventory reserve expense in our EMEALA segment associated with the shutdown of our direct operations in Russia. CROCS inc 33#34APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Gross Margin Reconciliation by Brand: GAAP Crocs Brand gross margin Non-GAAP adjustments: Distribution centers (¹) Non-GAAP Crocs Brand gross margin Three Months Ended June 30, 2023 2022 61.9 % 0.1 % 62.0 % 57.7 % 0.2 % 57.9 % GAAP HEYDUDE Brand gross margin Non-GAAP adjustments: Distribution centers (2) Inventory fair value step-up Non-GAAP HEYDUDE Brand gross margin (1) Represents expenses, including expansion costs and duplicate rent costs, primarily related to our distribution centers in Dayton, Ohio. (2) Represents a prior year step-up of HEYDUDE inventory costs to fair value upon the close of the acquisition on February 17, 2022. CROCS inc Three Months Ended June 30, 2023 2022 47.1 % less than 0.1% - % 47.1 % 32.4 % - % 14.7% 47.1 % 34#35APPENDIX 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) 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) (4) (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 June 30, 2023 2022 1,072,367 302,818 (1,126) (130) (3,248) (4,504) 298,314 28.2 % 27.8 % $ (in thousands) 964,581 249,769 (1,202) (5,741) (570) (7,513) 242,256 25.9 % 25.1 % Six Months Ended June 30, 2023 2022 1,956,533 544,260 $ (4,119) (2,193) (1,416) (5,608) (13,336) 530,924 27.8 % 27.1 % $ 1,624,729 456,016 (1,202) (26,342) (5,837) (33,381) 422,635 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 six months ended June 30, 2023 and costs related to the acquisition and integration of HEYDUDE in the three months ended June 30, 2022 and the partial period from the acquisition date of February 17, 2022 through June 30, 2022 (the "Partial Period"). 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. 28.1 % 26.0 % 35#36APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Income from Operations and Operating Margin Reconciliation: Six Months Ended June 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 $ $ Three Months Ended June 30, 2023 2022 1,072,367 318,489 $ 1,586 4,504 324,579 29.7 % 30.3 % $ (in thousands) 964,581 $ 247,964 35,137 7,513 290,614 $ 25.7 % 30.1 % 1,956,533 553,417 4,867 13,336 571,620 28.3 % 29.2% $ 1,624,729 366,641 66,055 33,381 466,077 22.6% 28.7 % (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 36#37APPENDIX Non-GAAP Reconciliation (Cont'd) Non-GAAP Income Tax Expense (Benefit) and Effective Tax Rate Reconciliation: Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 2022 2022 GAAP income from operations GAAP income before income taxes (1) Non-GAAP income from operations GAAP non-operating income (expenses): Foreign currency gains (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 318,489 277,242 324,579 551 548 (43,063) 717 283,332 64,830 1,544 (7,695) 58,679 23.4% 20.7 % (in thousands) 247,964 $ 214,304 290,614 (1,202) 86 (32,963) 419 256,954 53,989 8,416 (6,799) 55,606 $ 25.2 % 21.6% 553,417 469,008 571,620 148 719 (85,700) 424 487,211 107,053 4,614 (12,516) 99,151 22.8 % 20.4 % $ 366,641 313,364 466,077 (722) 188 (52,215) (528) 412,800 80,289 16,038 (9,906) 86,421 25.6 % 20.9 % (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 37#38APPENDIX 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 June 30, Six Months Ended June 30, 2023 2022 2023 (in thousands, except per share data) 2022 212,412 1,586 4,504 6,151 224,653 62,037 566 62,603 3.42 3.39 3.62 3.59 $ $ $ 160,315 $ 35,137 7,513 (1,617) 201,348 $ 61,590 646 62,236 2.60 $ 2.58 $ 3.27 $ 3.24 $ 361,955 4,867 13,336 7,902 388,060 $ 61,937 679 62,616 5.84 5.78 $ 6.27 $ 6.20 $ 233,075 66,055 33,381 (6,132) 326,379 60,712 859 61,571 3.84 3.79 5.38 5.30 (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 38#39APPENDIX 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 Non-GAAP Financial Guidance Approximately: 26.6% 0.9% 27.5% 23.0% (3.0)% 20.0% $10.95 to $11.34 $0.88 $11.83 to $12.22 (1) For the full year 2023, we expect to incur approximately $35 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. 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 nce related to the third quarter of 2023. CROCS inc 39#40CROCS inc TM