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Rocky Brands, Inc. Announces Third Quarter 2012 Results

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NELSONVILLE, Ohio--(BUSINESS WIRE)--

Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its third quarter ended September 30, 2012.

Third quarter 2012 net income was $5.4 million compared with $5.2 million in the third quarter of 2011, and diluted earnings per share were $0.72 compared to $0.70 during the same period last year. Third quarter net sales were $72.5 million versus net sales of $71.0 million a year ago.

David Sharp, President and Chief Executive Officer, commented, “We are pleased that several of our more recently launched footwear initiatives once again delivered strong results. Double digit percentage gains in our western, commercial military and lifestyle categories, which include our new Durango City line of more fashion forward boots, fueled a 9% increase in footwear sales for the third quarter. As apparel sales to one of our customers continue to decline and growth projections for the overall work and hunting footwear markets remain modest, we are encouraged by our ability to successfully develop new growth vehicles for the future. We are also pleased with our continued progress towards improving our balance sheet. With funded debt down 30% from a year ago, the Company is now better positioned to capitalize on the long-term growth opportunities that lie ahead.”

Third Quarter Review

Wholesale sales for the third quarter increased 4.5% to $62.9 million compared to $60.2 million for the same period in 2011. The increase in wholesale sales was driven by a 9% increase in footwear sales, which was offset by a decline in apparel sales. Retail sales for the third quarter were $9.6 million compared to $10.3 million last year. There were no military segment sales for the third quarter compared to $0.4 million in the third quarter of 2011.

Gross margin in the third quarter of 2012 was $26.2 million, or 36.1% of sales compared to $25.6 million, or 36.0% for the same period last year.

Selling, general and administrative (SG&A) expenses increased 1.2% to $18.2 million or 25.2% of net sales, for the third quarter of 2012 compared to $18.0 million, or 25.4% of net sales a year ago. The $0.2 million increase is primarily due to higher advertising expenses partially offset by a decrease in compensation expense.

Income from operations was $7.9 million, or 10.9% of net sales, compared to $7.6 million, or 10.7% of net sales, in the prior year period.

Interest expense decreased to $0.2 million for the third quarter of 2012 versus $0.3 million due to lower borrowings versus the same period a year ago.

The Company's funded debt decreased 30.3% or $18.2 million to $41.9 million at September 30, 2012 versus $60.1 million at September 30, 2011.

Inventory at September 30, 2012 decreased 7.4% or $5.9 million to $73.0 million compared with $78.9 million on the September 30, 2011.

Conference Call Information

The Company's conference call to review third quarter fiscal 2012 results will be broadcast live over the internet today, Wednesday, October 24, 2012 at 4:30 pm Eastern Time. The broadcast will be hosted at http://www.rockybrands.com.

About Rocky Brands, Inc.

Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky®, Georgia Boot®, Durango® and Lehigh® and the licensed brands Michelin® and Mossy Oak®. Rocky Brands is proud to supply footwear to the United States military. For more information, visit www.RockyBrands.com.

Safe Harbor Language

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management, and include statements in this press release regarding long-term growth opportunities (paragraph 3). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company's business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2011 (filed February 28, 2012) and the Company's quarterly reports on Form 10-Q for the quarters ended March 31, 2012 (filed April 25, 2012) and June 30, 2012 (filed July 27, 2012 and amended August 6, 2012). One or more of these factors have affected historical results, and could in the future affect the Company's businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company, or any other person should not regard the inclusion of such information as a representation that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

               

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 
September 30, 2012 December 31, 2011

September 30, 2011

Unaudited Audited Unaudited
ASSETS:
 
CURRENT ASSETS:
Cash and cash equivalents $ 3,509,973 $ 3,650,291 $ 3,330,196
Trade receivables – net 60,648,404 45,008,793 63,339,879
Other receivables 811,730 946,686 1,055,666
Inventories 73,028,601 65,019,048 78,887,067
Income tax receivable - 1,164,664 -
Deferred income taxes 1,091,657 1,154,040 1,238,989
Prepaid expenses   2,122,697   2,561,941   2,822,954  
Total current assets 141,213,062 119,505,463 150,674,751
FIXED ASSETS – net 24,396,719 23,557,102 23,572,687
IDENTIFIED INTANGIBLES 30,485,935 30,493,107 30,505,267
OTHER ASSETS   392,565   510,293   737,489  
TOTAL ASSETS $ 196,488,281 $ 174,065,965 $ 205,490,194  
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 13,366,846 $ 5,696,363 $ 11,054,561
Current maturities – long term debt - - 2,955
Accrued expenses:
Taxes - other 498,437 609,992 420,082
Income tax payable 1,676,590 - 1,916,316
Other   4,822,690   4,624,167   8,232,441  
Total current liabilities 20,364,563 10,930,522 21,626,355
LONG TERM DEBT – less current maturities 41,862,634 35,000,000 60,054,291
DEFERRED INCOME TAXES 10,765,962 10,987,395 9,521,852
DEFERRED LIABILITIES   406,323   488,437   535,937  
TOTAL LIABILITIES 73,399,482 57,406,354 91,738,435
SHAREHOLDERS' EQUITY:
Common stock, no par value;

25,000,000 shares authorized; issued and outstanding

September 30, 2012 - 7,503,568; December 31, 2011 -

7,489,995; September 30, 2011 - 7,489,995

69,694,770 69,572,270 69,546,028
 
Accumulated other comprehensive loss - - (2,608,298 )
Retained earnings   53,394,029   47,087,341   46,814,029  
 
Total shareholders' equity   123,088,799   116,659,611   113,751,759  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 196,488,281 $ 174,065,965 $ 205,490,194  
 
           

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 
Three Months Ended Nine Months Ended
September 30, September 30,
2012     2011 2012     2011
NET SALES $ 72,539,400 $ 71,020,546 $ 170,273,676 $ 175,609,453
 
COST OF GOODS SOLD   46,356,820     45,430,389     110,717,388     110,136,023  
 
GROSS MARGIN 26,182,580 25,590,157 59,556,288 65,473,430
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES   18,244,196     18,026,065     49,879,981     53,108,445  
 
INCOME FROM OPERATIONS 7,938,384 7,564,092 9,676,307 12,364,985
 
OTHER INCOME AND (EXPENSES):
Interest expense (192,249 ) (252,858 ) (467,202 ) (760,844 )
Other – net   138,757     106,033     143,038     153,442  
Total other - net (53,492 ) (146,825 ) (324,164 ) (607,402 )
 
INCOME BEFORE INCOME TAXES 7,884,892 7,417,267 9,352,143 11,757,583
 
INCOME TAX EXPENSE   2,517,455     2,205,000     3,045,455     3,724,000  
 
NET INCOME $ 5,367,437   $ 5,212,267   $ 6,306,688   $ 8,033,583  
 
INCOME PER SHARE
Basic $ 0.72 $ 0.70 $ 0.84 $ 1.07
Diluted $ 0.72 $ 0.70 $ 0.84 $ 1.07
 
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic   7,503,568     7,489,995     7,503,469     7,485,529  
Diluted   7,503,568     7,489,995     7,503,469     7,486,250  

Rocky Brands, Inc.
Jim McDonald, 740-753-1951
Chief Financial Officer
or
Investor Relations:
ICR, Inc.
Brendon Frey, 203-682-8200

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