Ladies and gentlemen, thank you for standing by, and welcome to Crocs Incorporated to acquire casual footwear brand HEYDUDE. At this time, all attendees are in a listen only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. If you need further assistance, please press star zero. Thank you. Now, I would like to welcome Ms. Cori Lin. Ma'am, please go ahead. Hello, everyone, and thank you for joining us today to discuss the announcement of our definitive agreement to acquire casual footwear brand HEYDUDE. Earlier today, we announced this transaction and a copy of the press release and investor presentation may be found on our website at crocs.com. We would like to remind you that some of the information provided on this call is forward-looking and accordingly, is subject to the safe harbor provisions of the Federal Securities Laws. These statements include, but are not limited to, statements regarding the anticipated consummation of the acquisition of HEYDUDE and the timing and benefits thereof, Crocs strategy, plans, objectives, expectations, financial or otherwise, and intentions for their financial results and growth potential, anticipated product portfolio, and our ability to create and deliver 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, performance, or achievements expressed or implied by the forward-looking statements. Crocs is not obligated to update these forward-looking statements to reflect the impact of future events, except as required by applicable law. We caution you that all forward-looking statements are subject to risks and uncertainties, including those described in the Risk Factors section of our annual report on Form 10-K. Accordingly, actual results could differ materially from those described on this call. Please refer to the Crocs annual report on Form 10-K as well as other documents filed with the SEC for more information relating to these risk factors. Adjusted operating margin is a non-GAAP measure. A reconciliation of this amount to its GAAP counterpart is contained in the presentation we issued earlier today. Joining us on the call today are Andrew Rees, Chief Executive Officer, and Anne Mehlman, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. At this time, I'll turn the call over to Andrew. Thanks, Cori. Hello, everyone, and thank you for joining us on short notice today during the busy holiday season. We're thrilled to share that Crocs has agreed to acquire HEYDUDE, a high-growth, highly profitable casual footwear brand. We believe HEYDUDE 's casual, comfortable, and lightweight products are aligned to the long-term consumer strengths and are a perfect fit for Crocs. As discussed on our recent Investor Day, we're incredibly optimistic about the standalone potential for the Crocs brand, including our expectations for the brand to achieve $5 billion in revenue by 2026. This remains unchanged. We also said never say never with regard to an acquisition, as you cannot predict when you may encounter the perfect fit, which we believe we have done with HEYDUDE. The addition of HEYDUDE significantly diversifies our product portfolio by adding an incredibly versatile silhouette with numerous wearing occasions. The brand scale position in casual footwear more than quadruples across a total addressable market to over $160 billion. HEYDUDE is highly profitable, and we expect the acquisition to be immediately accreted to Crocs industry-leading revenue growth, operating margins, and earnings. We're confident the combination will create significant shareholder value over the long term. Anne will provide additional details on the transaction and its impact on our financial expectations shortly. However, let me first share our rationale for acquiring HEYDUDE and the numerous strategic advantages resulting from the addition to our portfolio. First, the addition of HEYDUDE to Crocs creates a globally scaled leader in branded casual footwear. We would expect the combined company to have, for 2022, revenues in excess of $3.4 billion on a pro forma basis, which would make Crocs the second-largest branded player in casual footwear category globally. Second, the acquisition combines two fast-growing footwear brands and more than quadruples our total addressable market to over $160 billion. This addressable market represents more than half of the approximately $300 billion casual footwear market. Following the acquisition, Crocs will be the market leader in clogs and have a scale position in both sandals and the casual footwear category, with significant growth potential in all three categories. Third, the addition of HEYDUDE significantly diversifies our product portfolio and adds an incredibly versatile casual footwear silhouette. Following the acquisition, Crocs is expected to represent approximately 57% of product sales, down from 71% of revenues discussed at our recent Investor Day. Our outlined objective of growing Crocs sandal revenues by 4x through 2026 and the addition of fast-growing HEYDUDE will continue to increase our diversification. Fourth, like Crocs, HEYDUDE has a digital-first approach and high digital penetration. For the last twelve months ended October 31st, HEYDUDE 's digital revenues, which includes sales through its own.com and Amazon, were approximately 43% of its total revenues. Similar to Crocs, the HEYDUDE silhouette is easy to purchase online with a generous fit and no half sizes. We plan to continue to take a digital-first approach and expect to grow this important channel for both HEYDUDE and Crocs. Fifth, part of what we believe makes the HEYDUDE brand an ideal fit is its strategic focus on the same long-term consumer trends that are fueling Crocs. Namely casualization, comfort, sustainability, and personalization. Since Alessandro Rosano founded HEYDUDE in Italy, the company has grown by differentiating its products through unparalleled comfort and through innovative patterns and colors. The brand is focused on sustainability, offering environmentally friendly properties such as cork insoles and recycled materials. Sixth, HEYDUDE presents an opportunity to leverage Crocs' proven global playbook, specifically our global footprint, our best-in-class marketing expertise, and our strong wholesale relationships. With respect to international growth, HEYDUDE currently generates less than 5% of its revenues outside the United States, compared to Crocs that has 32% of its total revenues in over 80 countries worldwide. Over time, we plan to leverage Crocs' footprint to expand the HEYDUDE brand into EMEA and subsequently Asia. Turning to marketing expertise. HEYDUDE's brand awareness is approximately 20% today, compared with Crocs exceptionally high brand awareness of 92%. We look forward to deploying our best-in-class marketing approach to grow HEYDUDE brand awareness and revenues. Finally, today there is only 30% overlap between HEYDUDE and Crocs wholesale relationships. We intend to leverage our strong wholesale partnerships to expand HEYDUDE's distribution. These three areas alone represent significant upside for the HEYDUDE brand. Seventh, as I mentioned, and as Anne will review, HEYDUDE is highly profitable. We expect the acquisition to be accretive to Crocs' industry-leading growth and margins, as well as immediately accretive to earnings per share. Finally, we plan to quickly build HEYDUDE into a $1 billion+ brand by 2024. I already mentioned three key growth levers. Leveraging Crocs' international footprint for global growth, investing in marketing to build brand awareness, and leveraging Crocs' wholesale relationships to enhance distribution. In addition, we believe we will further accelerate digital growth by elevating digital capabilities, and we plan to invest to scale HEYDUDE's supply chain to gain efficiencies. HEYDUDE brand has incredible potential, and we're thrilled to add it to our portfolio. Before I turn the call over to Anne, let me briefly touch upon our integration plan. From a leadership perspective, we are pleased that HEYDUDE's founder, Alessandro Rosano, will stay on as strategic advisor and creative director. We're also excited to announce we have hired industry veteran Rick Blackshaw as Brand President. Rick will stand up a separate organization designed to ensure we maintain HEYDUDE's growth trajectory while also minimizing the disruption on the Crocs brand. Rick has already started to work on the growth levers I outlined so that we will hit the ground running upon close. We're confident in our ability to seamlessly integrate HEYDUDE and execute upon our plan, much like how we have executed on the Crocs plan and delivered tremendous shareholder value since 2014. In summary, we feel HEYDUDE is a unique opportunity and an ideal strategic fit for our company. Looking forward, we're excited and confident about the prospects of both the Crocs brand and HEYDUDE, and our ability to create shareholder value with the combined business. With that, I'll hand it over to Anne to provide some of the financial highlights of the transaction. Thanks, Andrew. First, I would like to echo Andrew's excitement. We are incredibly impressed with the business the HEYDUDE team has built and believe the combined business has enormous potential. We are thrilled that the acquisition is expected to be accretive to our high growth, industry-leading margins and earnings per share. As Andrew mentioned, HEYDUDE is a high-growth brand with revenues expected to more than double to approximately $570 million in 2021. The brand is also highly profitable. Even as we add in infrastructure to support sustainable growth, we expect best-in-class operating margins in excess of 26%. For 2022, we expect HEYDUDE revenues to grow to be between $700 million-$750 million, which represents growth of approximately 23%-32%. On a longer-term basis, we expect revenues to grow over 20% per annum and operating margins to exceed 26%. As Andrew also mentioned, we remain confident in our ability to deliver upon our long-term growth plan to grow the Crocs brand. HEYDUDE simply adds to Crocs' strong organic growth and profitability. Over time, we expect the HEYDUDE brand to achieve revenues of more than $1 billion, bringing our combined revenues over $6 billion with 26% operating margins. Turning to the acquisition. We believe the purchase price of approximately $2.5 billion is attractive, with an implied multiple of less than 15x EBITDA. As referenced in the press release, we intend to fund the acquisition through $2 billion in new Term Loan B debt, $450 million of Crocs shares issued to Mr. Rosano and $50 million from our Senior Revolving Credit Facility. We estimate pro forma net leverage as of December 31st, 2021 to be approximately 3x. Post-close, we expect the combined business to be highly cash generative, and after we invest in the business, we will use excess cash flow to rapidly repay debt. We will also pause share repurchases entirely for 2022 and until our net leverage is under 2x EBITDA. As a reminder, we returned significant cash to shareholders by repurchasing $1 billion of shares this year. In summary, we are excited by the addition of HEYDUDE to our portfolio and look forward to both brands creating significant shareholder value. I will now turn the call back to Andrew for his final comments. Thank you, Anne. We're incredibly excited to add HEYDUDE, a high-growth, highly profitable casual footwear brand to our portfolio. We're confident in our ability to use the proven Crocs playbook to expand the brand and create what we anticipate will be the leading branded casual footwear company. Let me close by wishing everybody a happy holiday. Operator, please open the call for questions. Thank you, sir. As a reminder, if you wish to ask a question, simply press star, then the number one on your telephone keypad. Your first question is from the line of Erinn Murphy from Piper Sandler. Your line is now open. Great. Thank you. Good morning. You guys know how to get all the hearts pumping fast this morning on a holiday morning. Great. A couple questions for me. Maybe, Andrew, if you could share a little bit more about how this deal came about, what were some of the data points that informed you, how competitive the process was? Just curious on that, and then I've got a couple follow-ups. Thanks. Great. Thank you, Erinn. I would say HEYDUDE is a brand that we've been watching for some time. We've seen it in the marketplace. We've seen them, I think, do a really nice job in engaging that kind of younger casual consumer. We're very impressed with what they've been doing. We've been watching them for some time. It became apparent sort of during the year that they were pursuing strategic opportunities, and we were excited to be involved in that process. I can't really comment on how competitive it was. It certainly was competitive, but we're excited to be involved in that process. More importantly, we think this is a, you know, an excellent strategic fit with Crocs. Great. Maybe thinking about that fit, I didn't hear you mention the word synergies. Can you talk about how you think about synergies between Crocs as well as HEYDUDE? Another question, if you could just share a little bit more about the geographic footprint within the United States. I think you said 5% internationally, but curious on kind of how that core customer looks here within the United States as well. Yeah. Well, let me maybe touch on the last bit first. Yeah, HEYDUDE's concentration and core customer is really down through the Midwest and the South, and I think there's very clear evidence it's starting to propagate to the East Coast and then eventually to the West Coast. If you remember, that's very similar to the trajectory that Crocs has taken over the last three years-four years in our most recent, you know, turnaround and trajectory. Very consistent with engaging the sort of broad casual footwear population. In terms of the synergies. Synergies. How we think about this deal is really about building the HEYDUDE brand to allow it to achieve the growth potential that it has. It's less about synergies. We think we need to add, you know, fairly significant marketing investment and fairly significant infrastructure to allow the brand to reach its full potential. It's more about investing behind the brand. It's highly profitable today, and that, I think, gives us the opportunity to do that. We will also structure it in such a way that, you know, we would keep the brand-centric components, product marketing, go to market separate from the Crocs brand so that we don't, you know, we don't distract our Crocs employees, but we'll obviously get leverage on the back end from all of our shared services. Got it. Just last question for Anne. You've mentioned in your script that you are pausing share repurchases until a leverage ratio is I think below 2x. What have you done in the fourth quarter to date? I think you were expected to do a half a billion dollars of share repurchases. Should we assume that most of that is completed, none of that's completed? Just help us think through that, given, you know, obviously you had the purview of this acquisition as well. Yes. That you're referring to the ASR that we announced at Investor Day. Yes. We had announced that, and that is completed. Thank you so much for the clarification. Yeah. I'll let someone else hop in. Thanks, Erinn. Congratulations. Yeah. Thanks, Erinn. Your next question is from the line of Jonathan Komp from Baird. Your line is now open. Yeah. Hi. Thank you. Hi, and good morning. Want to first just understand the brand you're acquiring a little more, HEYDUDE. Could you maybe just expand how much overlap you think there is with the core Crocs customer today? Can you give us a better sense? I know you highlighted the digital penetration, but can you give us a sense of the rest of the distribution wholesale, what the makeup looks like, and where you see opportunities there? Yes, absolutely. As we did our sort of due diligence research, we see a very high overlap with the Crocs customer, right? As we look at the HEYDUDE customer, they have Crocs in their closet. We know who a lot of these customers are, and we think our customer database, which is very significant, will be a great asset in that regard. It's a different wearing occasion, right? They're wearing this shoe for a different wearing occasion, so we see it as very complementary. That's one of the things that I think makes it such a great complement to Crocs. We've got a great customer overlap, different wearing occasions, so we can really market well to this consumer. In terms of their distribution, they're digital first, as we mentioned. They have a very well-developed e-com business and also Amazon business. They're reaching their customers through digital channels very similar to how we do. That was really important to us. From a wholesale perspective, they have no retail, so it's all wholesale. I would say it's divided between a number of large, you know, family footwear accounts, but they're under-penetrated in the larger accounts. That's a really well-developed independent distribution. As we look at the overlap between our wholesale customers and their wholesale customers, we see lots of opportunity to extend them into extended distribution. Okay, great. Maybe the broader question when you think about, you know, reaching $1 billion the next few years and growing from there, maybe looking back and the progress to date, how do you get comfort that this is not like some other categories in the footwear industry in the past where you've seen, you know, domestic brands catch fire for years and get to $several hundred million only to sort of peak out in terms of the popularity? Just curious how you think about, you know, the cyclicality of the business, if there is any, or your comfort there. Yeah, that's a really good question. So a couple of things. One, I'd point to the scale currently, right? So, estimated revenues for 2021, I think are around $570 million, and we've provided outlined guidance here that we think HEYDUDE for 2022 will between $700 million and $750 million. So, they already have significant scale, and I would say that is with significant under-penetration in certain parts of the country, and I think very clear opportunities within key accounts. Secondly, that is all domestic, right? The vast majority of the business, 95% of the business is here in the U.S., and I think the research that we've done in assessing this acquisition is this product, this silhouette has definitely potential across the globe, particularly in Europe, Middle East and also key parts of Asia. We're pretty confident about that. You may remember that, this product actually had a lot of resemblance to some products that we have made and sold in the past in different parts of the globe. We know how that casual loafer silhouette plays in different parts of the globe. As we have experience and I would say a good amount of confidence. In terms of the faddish component, which I think is a little bit what you're referring to as well, as we look at the stats and the consumer engagement that the brand gets, there's a lot of repeat purchasing. There's very high customer satisfaction, and it's really all about that comfort, that lightweight, which we know are key components to consumer engagement. We feel pretty confident that this is a brand that can grow in scale and dimension. That's very helpful. Maybe last one for me then for Anne. Is there any more help you can give us on the 2022 accretion? Just thinking through how much revenue of the $700 million-$750 million you might expect to capture, and then any directional comments on, you know, the margin expectation for next year or the interest rate you expect you might pay on the incremental debt? Yeah, sure. Good questions. I think for next year, we expect revenue, as we said, on a pro forma basis, to be $700 million-$750 million, and I think we'll capture quite a bit of that next year. When you think about, I think in the purchase agreement, we said we would close in approximately 60 days, which implies, you know, probably a late February-ish close. We'll have most of the year next year from a revenue standpoint. Then from a margin standpoint, as we said, we think long-term operating margins look like 26%. If you exclude any type of like one-timers or transition costs, you know, we feel pretty confident in those margins even after we invest in SG&A to support kind of the underlying infrastructure of the business. From an interest rate perspective, we're still working through finalizing our Term Loan B and the interest rate, which we will come out with, but I expect it to be close to around what we have on our current debt for our high yield bonds, maybe a little less. Okay, excellent. Thank you very much. Thank you. Great. Thank you. Your next question is from the line of Sam Poser from Williams Trading. Your line is now open. Thanks for taking my questions, folks. I'm gonna re-ask the last question. What% does the company do revenue by quarter, like Q1, Q2, Q3, Q4? Yes. Hey, Sam, it's Anne. Sorry, go ahead. No, go ahead. I was about to say you were gonna answer that. Perfect. You know, they're a quickly growing company, so I don't, you know, wanna give out the exact percentages, but I would say at this point, we don't expect this to be an extremely seasonal business for the purposes of modeling for next year. We should model 25% a quarter. But given the strength of their digital businesses, I would assume that the sell-through rate and that business peaks in Q2 and Q3, while the sell-in would happen more seasonally. I mean, wouldn't that make Q2 and Q3 larger quarters than Q1 and Q4? Sam, I don't think we're prepared to guide by quarter yet, just, you know, as we're pretty early in this. We're happy to give more color, as we get into next year, and we will give a lot more detail. For the purposes of this, I would assume that we close in approximately 60 days, and that gives you know, approximately 10 months of revenue. Okay. Then I've got a few more. The breakout between men's, women's and kids, how that's looking? Yeah. One of the great things about this brand is it does service men, women's, and kids. I think the best way to think about it is about half the business is men's, and then the rest is women's and kids. Kids is a smaller percentage than Crocs is. I would say over the last two years, the women's business has been a very high-growth business. The women's business has gotten a lot of traction over the last two years. That's kinda the best way to think about it. Was the acquisition a competitive process, or how did this acquisition come together? As I said to an earlier question, we've been monitoring the brand for a number of years. We felt like it was an interesting brand that was creating a really interesting product and great content and driving a lot of great consumer engagement. It became apparent to us during the year that the founders were interested in pursuing strategic alternatives, and we engaged with them. I had two more. One, where is the product made? Two, this is from one of my clients, why go so big on your first deal? Great. The product is predominantly made in China. The vast majority of product comes out of China today. They have gone through some diversification to Indonesia and other parts of the globe. As we look at the sourcing footprint, we will obviously add our expertise to that and probably further diversify that sourcing footprint. It today is coming out of China, and that would largely be the case for certainly next year. In terms of the size of the acquisition, as I think you all know, you know, any kind of acquisition is a great deal of work, but also brings with it a significant amount of risk. As we looked at the sort of risk-reward, I think it's very clear to us to really move the needle for the Crocs brand and create value for our shareholders. As we looked at this brand, we thought this made a ton of sense. It is of scale. It does move the needle. It makes a difference. I think this is of scale that we can really add a lot of value for shareholders, and we can create, you know, another meaningful brand in the Crocs portfolio, which adds a great deal of diversification. Thanks. One more. I'm sorry, just one more. Just to clarify, the op margin in 2022 and, you know, you're expecting to be around that 26%, or is that long term? Somebody asked earlier, you know, what's your, how should we think about that in 2022, just to clarify? From a long-term perspective, we think long-term sustainable margins are 26%. We didn't guide specifically for 2022 at this point, but I'm confident that it'll be accretive and probably around that 26%, excluding any, you know, one-time or transition costs for next year. Thanks very much. I'm very close with. Thank you. Congratulations. Thank you, Sam. You too. Your next question is from the line of Jay Sole from UBS. Your line's now open. Great. Thank you so much. Andrew, I know you already answered a bunch of questions about the brand and the distribution. I wanna just ask you about the product a little bit more. You mentioned some patents. Can you just elaborate on how HEYDUDE differentiates from a product standpoint? Yeah. I think it differentiates from a product standpoint less through intellectual property and more through, you know, consumer experience. The differentiation is style, right? The uppers are frequently changed. They can be seasoned right. They can be SMUs for key accounts. It really is a kind of style component married with a very strong emphasis around comfort, around fit, around lightweight and easy on and off. It's a combination of style and comfort. They do that through, I would say, a very nimble and fast-moving design, development, and production process. Got it. Okay. I guess just going forward, I mean, have you decided if you're gonna report HEYDUDE separately, or is it gonna be integrated into sort of the segment, the geographic segment breakdown that you typically give? Andrew, I can talk to this one if you want. I think, Jay, we're still working through that, but I expect to have a brand P&L for HEYDUDE. At least, it's because we're running it commercially separate. We haven't completely decided, but we'll certainly give insight into Crocs and then HEYDUDE separately. Got it. Okay. Thank you so much. Thank you. Your next question is from the line of Laura Champine from Loop Capital. Your line's now open. Good morning. Thanks for taking my question. Is this, in your view, kind of a preliminary step towards becoming a portfolio of brands, or is this more just, you know, Santa brought us another fast-growing, wide-toe shoe company? Yeah, I think probably I'd say neither, Laura, in terms of how you characterized it. It certainly doesn't mark the first step in our minds of being sort of a portfolio of brands. As we looked at the Crocs company, we have tremendous confidence in the growth of Crocs as we outlined in our investor meeting in September. You know, we outlined that we think the Crocs brand could get to $5 billion by 2026. But we also recognized the strategic weakness there, which is the concentration of a highly valuable public company, you know, with one brand and also very concentrated in a narrow set of products. We felt like bringing to the table another brand in a different product category with much broader appeal was gonna drive a lot of diversification, and mitigate risk for shareholders. We also felt like the playbook that we had developed for Crocs would be very, very effective for this brand. I think it was a opportunistic acquisition, but I think it's extremely compelling and will drive very significant shareholder value creation. Got it. What's driving the growth of HEYDUDE? Is this about distribution expansion? Is it about a step up in marketing? Why are they able to grow at this rate? Historically, I think they're able to grow at this rate because of great product, right? I think their distribution is good. I think the marketing is good, but not necessarily great. But they are just delivering great product that's very much in sync with what consumers are looking for. You know, our due diligence, it shows that, you know, sell-throughs are extraordinary. They essentially can't keep the product in stock, whether it's on their own DTC environments, on their own eCom environments, or even with key wholesale partners. It's great product and strong consumer demand. As we look to the future, I think our growth opportunities are really clear. It's investment in marketing to further dimensionalize and build out the brand. It's adding digital capabilities to improve their digital performance. It's wholesale expansion to some of our key accounts, many of which you have heard from this morning. It's international expansion. I think our growth pathway is extremely clear and very much within our capabilities. Got it. Lastly, you mentioned that there's a different use case for these shoes. I think that the presentation shows folks sort of sitting on the sidewalk blowing bubbles in them. I'm just not sure what is the different use case. Why would I want to wear a HEYDUDE shoe differently than a Crocs? I think it's a much broader wear occasion, right? The consumer who wears Crocs I think is very confident in their choices. They're forward-thinking in terms of their desire to wear a molded shoe, a nontraditional material type. They recognize the benefits of that material type. As we know, one of the things that we definitely have confronted with Crocs, we think it's an asset, which is that polarizing nature. We have customers, consumers that love Crocs and consumers that frankly, you know, rile against Crocs, right? We have that love-hate relationship. That's been incredibly powerful from a marketing perspective, but you still do get left with that portion of the population that are not interested in wearing a molded shoe. The broader use case that you get with HEYDUDE is it's not molded, right? It's a material upper. It could be cotton, it could be synthetic, et cetera. And it's a, I think it's a much more approachable, accessible, and understandable style that has a much broader footprint. I think we highlighted in, I think our investor presentation, you know, that casual footwear segment is a $100 billion-plus marketplace. It dramatically increases the total addressable market we're looking at. Got it. Thank you. Thank you. Your next question is from the line of Susan Anderson from B. Riley. Your line's now open. Hi, good morning. I was wondering if maybe you could talk about the growth margin relative to Crocs. Is it also very similar in the makeup? I'll let Anne take that. Yeah. Hi. I think, you know, as we talked about from an operating margin standpoint, we're really excited that they have such strong operating margins. You know, we think that we will need to invest into SG&A to scale the business, and that after that investment, they'll be at, you know, 26%+ operating margins on a sustainable basis. I think as we get into more of a detailed P&L and guidance, we'll provide additional color. Obviously, you know, we're still working through how they, you know, account for gross margin versus the way that we do. I think that we'll talk about more pieces on our Q4 earnings call. Great. Just looking at the growth expectation for next year, I guess, does that include the international expansion or is that further out? I guess what region, which parts of the globe would you expect to expand first? I'm just curious within the U.S., I think you said it was very popular in the Midwest and South and less penetrated on the East and West Coasts. Are you expecting that growth to be mainly driven by expansion into the East and West Coasts? Yes. I would say, first, priority is the U.S., right? As we look at the U.S., we think there is a lot of growth opportunity, either regionally or frankly even within the regions where they are currently selling. This is. I think there's lots of opportunity for channel growth. There's lots of opportunity for digital growth, and there's geographic expansion within the United States. I would say that is priority number one. Priority number two will then be international. We would not expect, you know, really any significant international growth in 2022. We'd look to lay the groundwork for that for the future. I think we'll probably approach that sequentially, where we'd look to our EMEA region, so Western Europe and the Middle East first, and then we'd look to our key Asian markets second. We'd really cadence that out to make sure that we're, you know, adding all the right resources to brand and really setting the brand up for success in the long term. Great. Finally, just thinking about, I mean, you talked about the differentiating aspects of the product. I'm curious who you see the competitors to HEYDUDE out there in the market right now? Yeah. I think there's a pretty broad range of competitors, frankly. You know, there's a lot of smaller players. I mean, if you look, you know, specifically at the product, you'd see some competitors are making, you know, very similar product. But you'd also think about, you know, sort of larger competitors that make a broad range of casual footwear like a Skechers. I think there's a broad range of competitors. I think it's really important that we continue to maintain the brand momentum, we continue to move fast, and we create real meaning behind the brand. Got it. Last one really quick for Anne. Did you guys say what the rate will be on the new $2 billion term loan? We haven't finalized that yet, but I said that, we expect it to be at or below, around our current debt rate on our high yield bonds. Great. Thanks so much, you guys. Happy holidays. Thank you. Thank you. Happy holidays. Happy holidays. Once again, if you wish to ask a question, simply press star then one on your telephone keypad. Your next question is from the line of Jim Chartier from Monness, Crespi, Hardt & Co. Your line is now open. Good morning. Thanks for taking my question. Just given the trajectory of the sales, you know, looks like, you know, HEYDUDE could get to $1 billion, you know, by 2024, you know, without any help from Crocs. You know, do you believe that's the case? Do they need your, you know, expanded distribution and international to get there, or do you just kind of accelerate the trajectory that they're on? Yeah. I think, look, I think the HEYDUDE team is very capable. They're very strong in terms of, you know, product development and what they envisage for the consumer. I think we will be able to help a lot in terms of distribution. You know, particularly our wholesale distribution here in the U.S. and also our international distribution. You know, the sort of investments that are required and the stepping stone that you need to go through from being a single country brand to a multi-country brand is pretty significant. As you know, we have all of that infrastructure in place. We have all those people in place, and we know how to do that. I think that's really important. I think the other component is marketing. I think you know that we have kind of what we regard as best-in-class marketing strategies that have really engaged our consumer and driven very significant growth in the Crocs brand. They've got high growth, but I think the marketing can be taken to the next level, which will further enhance the growth potential. You know, it's a great team. They've done a great job. They're on a great trajectory, but I think we add a lot. Great. Then you mentioned a lot of investment and it seems like a lot in marketing. You know, what percentage of sales does HEYDUDE spend on marketing and kind of how does that compare to Crocs? I think, you know, we're not ready to give out those specifics. I would say when we think about HEYDUDE, it's a little interesting on the SG&A front because we are actually going to invest more than what they've been spending. We're focused on really putting in, as Andrew just mentioned, solid processes to get them to the next billion dollars, and that includes investment in marketing as well as some, you know, back-end infrastructure. That's, you know, incorporated into what we think are the long-term 26% operating margin. We'll come out and, you know, give you guys all more detail once we work through all the specifics. We do expect to increase their spend in marketing quite a bit. Great. Just any supply chain constraints that impacted, you know, HEYDUDE sales this year, and then anything into the first half of next year? Yes. I would say so. I think, you know, look, they've suffered from all of the same supply chain issues that really everybody in the industry has. Now they're not in Southern Vietnam, so that hasn't been an issue. They're really, as I answered an earlier question, the vast majority of production is in China. Significant delays in terms of getting product to the United States and also elevated costs associated with doing that. You know, the sort of global freight issues have certainly affected them. Great. Thanks, and happy holidays. Thank you. Happy holidays. Happy holidays. There are no further questions. Presenters, please continue. Well, excellent. I really appreciate everybody joining us at short notice. I know this is a little disruptive immediately before Christmas. Let's just close by just reiterating how excited we are about this transaction and the, I think, the really compelling strategic unlock it provides for Crocs, and wishing everybody a very happy holiday. With that, this concludes today's conference call. Thank you for attending. You may now disconnect.