Crocs Modifies Credit Agreement

Crocs, Inc. ( CROX - Snapshot Report ) recently amended its existing revolving credit agreement. The amendment increased the size of the revolving credit line from $70 million to $100 million and has extended the maturity period from four years to five years. Moreover, the company expects to lower the borrowing costs based on the 50 basis points reduction in interest rate as compared with the previous credit agreement due 2016.

The revolving credit facility is arranged by PNC Bank, N.A., a member of The PNC Financial Services Group, Inc. ( PNC - Analyst Report ) , JPMorgan Chase Bank- a part of JPMorgan Chase & Co. ( JPM - Analyst Report ) and Wells Fargo Bank- an associate of Wells Fargo & Company ( WFC - Analyst Report ) .

Crocs’ Chief Financial Officer, Jeff Lasher, was pleased with the favorable fee structure, which resulted from the amendment. He opined that the new agreement will create immediate savings and help in easy execution of business with increased credit size and extended term. Additionally, the shoe manufacturer will now be able to invest more into its business for growth and enhance shareholder value as well.

In October 2011, Crocs released its third-quarter 2012 financial results. The company earned 49 cents per share in the third quarter of 2012, ahead of the Zacks Consensus Estimate of 43 cents per share as well as last year’s 33 cents per share.

Quarterly revenues jumped 7.5% year over year to $295.6 million, driven by strong sales growth in Asia (up 11.3%) and America (up 7.4%), partially offset by soft business in Europe (down 2.9%) owing to the challenging macroeconomic conditions. Sales grew 1.5% at wholesale and 17.7% at Retail. Gross profit enhanced 9.2% to $160.7 million.

For the fourth quarter of 2012, the company expects break-even earnings per share on revenue of $220 million.

Based in Niwot, Colorado, Crocs is a rapidly growing designer, manufacturer and marketer of footwear for men, women and children under the CROCS brand. We currently maintain our long-term ‘Underperform’ recommendation on the stock. Moreover, Crocs has a Zacks #4 Rank, which translates into a short-term (1-3 months) ‘Sell’ rating.