Rocky Brands, Inc. Announces Second Quarter 2015 Results

Second Quarter Earnings Per Share Increased 30% to $0.26

Funded Debt Decreased $7.8 Million or 17.9% to $35.6 Million

NELSONVILLE, Ohio--()--Rocky Brands, Inc. (NASDAQ:RCKY) today announced financial results for its second quarter ended June 30, 2015.

Second Quarter 2015 Sales and Income

Second quarter net sales were $68.6 million compared to $68.8 million in the second quarter of 2014. The Company reported second quarter net income of $2.0 million, or $0.26 per diluted share compared to net income of $1.5 million, or $0.20 per diluted share in the second quarter of 2014.

David Sharp, President and Chief Executive Officer, commented, “We continue to deliver exceptionally strong profit gains year-over-year highlighting the power of our business model. The enhancements we’ve made to our operating structure fueled improved gross margins and lower expenses in the second quarter, allowing us to translate a slight decrease in sales into a 30% increase in earnings per share. Our top-line comparison reflects certain one-time events such as a seeding program with a major retail partner during the year ago period that we didn’t repeat this year which impacted our wholesale results, offset by a significant increase in our contract military business. Based on current sell-through momentum, our fall order book and easier comparisons, we are confident that we can increase sales mid-single digits during the back half of 2015.”

Second Quarter Review

Net sales for the second quarter were $68.6 million compared to $68.8 million a year ago. Wholesale sales for the second quarter decreased 4.9% to $53.9 million compared to $56.7 million for the same period in 2014. Retail sales for the second quarter increased 1.2% to $10.2 million compared to $10.1 million for the same period last year. Military segment sales for the second quarter increased to $4.5 million compared to $2.0 million in the second quarter of 2014.

Gross margin in the second quarter of 2015 was $22.6 million, or 33.0% of sales, compared to $22.6 million, or 32.8% of sales, for the same period last year. The 20 basis point increase was driven by higher wholesale and retail gross margins, partially offset by the increase in military segment sales which carry lower gross margins than wholesale and retail.

Selling, general and administrative (SG&A) expenses were $19.4 million, or 28.3% of net sales, for the second quarter of 2015 compared to $20.0 million, or 29.1% of net sales, a year ago. The $0.6 million decrease in SG&A expenses was primarily attributable to lower incentive compensation expense.

Income from operations was $3.3 million, or 4.7% of net sales, compared to $2.5 million, or 3.7% of net sales, a year ago.

Interest expense was $176,000 for the second quarter of 2015, versus $225,000 for the same period last year.

The Company’s funded debt decreased $7.8 million or 17.9% to $35.6 million at June 30, 2015 compared to $43.4 million at June 30, 2014.

Inventories were $86.5 million at June 30, 2015 compared with $86.4 million on the same date a year ago.

Conference Call Information

The Company’s conference call to review second quarter 2015 results will be broadcast live over the internet today, Wednesday July 22, 2015 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®, Creative Recreation®, 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 sales growth (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, 2014 (filed February 27, 2015) and quarterly report on Form 10-Q for the quarter ended March 31, 2015 (filed April 30, 2015). 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

 
  June 30, 2015   December 31, 2014   June 30, 2014
Unaudited Audited Unaudited
ASSETS:
 
CURRENT ASSETS:
Cash and cash equivalents $

4,526,938

 

$

4,616,694

 

$

3,960,134

 

Trade receivables – net 58,073,165 55,807,103 54,088,664
Other receivables 605,019 476,480 754,889
Inventories 86,478,155 85,237,042 86,438,290
Income tax receivable 56,540 - 7,039
Deferred income taxes 1,291,907 1,291,907 1,104,050
Prepaid expenses   2,672,643     2,553,442     2,657,619  
Total current assets 153,704,367 149,982,668 149,010,685
FIXED ASSETS – net 25,258,833 26,264,641 27,641,771
IDENTIFIED INTANGIBLES 36,615,202 36,681,644 36,741,214
OTHER ASSETS   269,620     299,490     348,958  
TOTAL ASSETS $ 215,848,022   $ 213,228,443   $ 213,742,628  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 19,436,481 $ 15,116,131 $ 18,433,803
Accrued expenses:
Taxes - other 521,327 532,470 539,919
Other   6,596,140     9,561,139     7,272,867  
Total current liabilities 26,553,948 25,209,740 26,246,589
 
LONG TERM DEBT 35,593,360 36,270,373 43,359,640
DEFERRED INCOME TAXES 12,928,048 12,928,048 11,750,718
DEFERRED LIABILITIES   389,208     472,364     293,823  
 
TOTAL LIABILITIES 75,464,564 74,880,525 81,650,770
 
SHAREHOLDERS' EQUITY:
Common stock, no par value;

25,000,000 shares authorized; issued and outstanding June 30, 2015 - 7,562,069; December 31, 2014 - 7,550,126; June 30, 2014 - 7,543,210

70,667,372 70,460,672 70,304,984
Retained earnings   69,716,086     67,887,246     61,786,874  
 
Total shareholders' equity   140,383,458     138,347,918     132,091,858  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 215,848,022   $ 213,228,443   $ 213,742,628  
 

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 
  Three Months Ended   Six Months Ended
June 30, June 30,
2015   2014 2015   2014
NET SALES $ 68,583,196 $ 68,822,520 $ 134,034,499 $ 134,605,804
 
COST OF GOODS SOLD   45,934,563     46,236,858     89,414,556     90,166,993  
 
GROSS MARGIN 22,648,633 22,585,662 44,619,943 44,438,811
 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

  19,395,298     20,041,283     38,963,245     40,556,822  
 
INCOME FROM OPERATIONS 3,253,335 2,544,379 5,656,698 3,881,989
 
OTHER INCOME AND (EXPENSES):
Interest expense (176,186 ) (225,299 ) (341,262 ) (443,972 )
Other – net   4,524     6,381     (58,816 )   232  
Total other - net (171,662 ) (218,918 ) (400,078 ) (443,740 )
 
INCOME BEFORE INCOME TAXES 3,081,673 2,325,461 5,256,620 3,438,249
 
INCOME TAX EXPENSE   1,079,000     814,000     1,840,000     1,203,000  
 
NET INCOME $ 2,002,673   $ 1,511,461   $ 3,416,620   $ 2,235,249  
 
INCOME PER SHARE
Basic $ 0.26 $ 0.20 $ 0.45 $ 0.30
Diluted $ 0.26 $ 0.20 $ 0.45 $ 0.30
 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic   7,561,850     7,543,173     7,560,603     7,541,462  
Diluted   7,578,713     7,545,319     7,572,467     7,542,871  

Contacts

Company:
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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