Market Overview

Rocky Brands, Inc. Announces 2018 Second Quarter Results

Share:

Diluted EPS Increased 75.0% to $0.35

Wholesales Sales Increased 7.3% to $39.8 Million

Retail Sales Increased 6.7% to $11.7 Million

Rocky Brands, Inc. (NASDAQ:RCKY) today announced financial results for
its second quarter ended June 30, 2018.

Second Quarter 2018 Sales and Income

Second quarter net sales were $58.2 million compared to $58.5 million in
the second quarter of 2017. The Company reported second quarter net
income of $2.6 million, or $0.35 per diluted share compared to a net
income of $1.5 million, or $0.20 per diluted share in the second quarter
of 2017.

Net sales were $119.6 million and $121.5 million for the six months
ended June 30, 2018 and 2017, respectively. The Company reported net
income of $5.9 million, or $0.79 per diluted share and a net income of
$3.0 million, or $0.40 per diluted share for the six months ended June
30, 2018 and 2017, respectively.

Jason Brooks, President and Chief Executive Officer, commented, "We had
an excellent second quarter highlighted by high-single digit growth in
wholesale sales combined with continued strength in our retail division.
Our focus on introducing innovative new products into the marketplace,
supporting our retail partners with great service and enhancing our use
of digital advertising is driving increased direct sales of Georgia
Boot, Durango, and Rocky's current offerings at higher gross margins. At
the same time, our internal manufacturing capabilities are providing us
with a great opportunity to expand our commercial military operations
both in the U.S. and overseas. We are also encouraged with the ongoing
success of Lehigh, our differentiated direct business-to-business model,
which continues to grow through key account wins and increased
participation and retention with existing accounts. Looking ahead, I'm
confident that we have the right strategies and people in place to build
on our recent accomplishments and deliver improved profitability and
greater shareholder value for years to come."

Second Quarter Review

Net sales for the second quarter decreased 0.4% to $58.2 million
compared to $58.5 million a year ago. Wholesale sales for the second
quarter increased 7.3% to $39.8 million compared to $37.1 million for
the same period in 2017. Retail sales for the second quarter increased
6.7% to $11.7 million compared to $11.0 million for the same period last
year. Military segment sales for the second quarter were $6.7 million
compared to $10.3 million in the second quarter of 2017.

Gross margin in the second quarter of 2018 increased to $19.5 million,
or 33.6% of sales, compared to $18.2 million, or 31.1% of sales, for the
same period last year. The 250 basis point increase was driven by higher
wholesale and retail margins combined with a lower percentage of
military sales, which carry lower gross margins than wholesale and
retail sales.

Operating expenses were $16.2 million, or 27.8% of net sales, for the
second quarter of 2018 compared to $15.9 million, or 27.2% of net sales,
a year ago.

Income from operations for the second quarter of 2018 was $3.4 million,
or 5.8% of net sales compared to $2.3 million for the same period a year
ago, or 3.9% of net sales.

Inventory at June 30, 2018 decreased 4.8% to $72.6 million compared to
$76.3 million on the same date a year ago.

Conference Call Information

The Company's conference call to review second quarter 2018 results will
be broadcast live over the internet today, Tuesday, July 31, 2018 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®,
Lehigh®, and the licensed brand Michelin®.

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 our future profitability and the delivery of
greater shareholder value (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, 2017 (filed March 12, 2018) and quarterly report
on Form 10-Q for the quarter ended March 31, 2018 (filed May 9, 2018).
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
(Unaudited)
 
 

June 30,

 

December 31,

  June 30,
2018 2017 2017
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 8,327,895 $ 3,680,776 $ 2,665,148
Trade receivables, net 42,615,759 45,027,002 39,952,038
Contract receivables 8,633,764 - -
Other receivables 213,672 806,468 687,851
Inventories 72,644,313 65,622,432 76,314,721
Income tax receivable 222,246 1,849,237 -
Prepaid expenses 2,185,307 2,199,648 2,085,839
Total current assets 134,842,956 119,185,563 121,705,597
PROPERTY, PLANT & EQUIPMENT – net 23,655,075 23,781,001 25,610,927
IDENTIFIED INTANGIBLES 30,293,153 30,314,749 33,351,030
OTHER ASSETS 172,607 197,977 227,720
TOTAL ASSETS $ 188,963,791 $ 173,479,290 $ 180,895,274
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 17,641,689 $ 12,982,535 $ 17,475,226
Contract liabilities 8,633,764 - -
Accrued expenses:
Salaries and wages 2,516,121 1,754,681 1,737,799
Taxes - other 348,738 599,793 543,453
Accrued freight 531,350 770,219 508,234
Commissions 420,151 455,845 386,020
Accrued duty 2,338,102 2,160,847 2,562,432
Income tax payable - - 617,249
Other 1,124,955 1,301,931 1,229,769
Total current liabilities 33,554,870 20,025,851 25,060,182
LONG TERM DEBT - 2,199,423 8,618,697
LONG TERM TAXES PAYABLE 1,776,512 2,286,512 -
DEFERRED INCOME TAXES 7,726,234 7,726,234 10,464,435
DEFERRED LIABILITIES 153,496 148,408 181,737
TOTAL LIABILITIES 43,211,112 32,386,428 44,325,051
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding June 30, 2018 -
7,414,509; December 31, 2017 - 7,398,654 and June 30, 2017 -
7,441,851
69,437,156 68,973,927 69,449,917
Retained earnings 76,315,523 72,118,935 67,120,306
Total shareholders' equity 145,752,679 141,092,862 136,570,223
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 188,963,791 $ 173,479,290 $ 180,895,274
 
 
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
       
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017   2018   2017  
 
NET SALES $ 58,205,840 $ 58,454,954 $ 119,592,513 $ 121,527,907
COST OF GOODS SOLD 38,673,427   40,291,433   79,094,918   83,616,306  
GROSS MARGIN 19,532,413 18,163,521 40,497,595 37,911,601
 
OPERATING EXPENSES 16,159,329   15,904,935   32,896,836   33,286,844  
 
INCOME FROM OPERATIONS 3,373,084 2,258,586 7,600,759 4,624,757
 
OTHER EXPENSES (39,933 ) (47,403 ) (178,497 ) (147,633 )
 
INCOME BEFORE INCOME TAXES 3,333,151 2,211,183 7,422,262 4,477,124
 
INCOME TAX EXPENSE 684,000   752,000   1,522,000   1,522,000  
 
NET INCOME $ 2,649,151   $ 1,459,183   $ 5,900,262   $ 2,955,124  
 
INCOME PER SHARE
Basic $ 0.36 $ 0.20 $ 0.80 $ 0.40
Diluted $ 0.35 $ 0.20 $ 0.79 $ 0.40
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 7,410,236   7,442,000   7,408,438   7,438,000  
Diluted 7,464,130   7,445,268   7,445,060   7,441,514  

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