Rocky Brands, Inc. Announces First Quarter 2016 Results

NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its first quarter ended March 31, 2016.

First Quarter 2016 Sales and Income

First quarter net sales were $57.5 million compared to $65.5 million in the first quarter of 2015. The Company reported a first quarter net loss of $0.2 million, or ($0.03) per diluted share compared to net income of $1.4 million, or $0.19 per diluted share in the first quarter of 2015.

David Sharp, President and Chief Executive Officer, commented, “We are making solid progress executing our strategies aimed at further diversifying our business. Earlier this month we announced actor and musician Nick Jonas as brand ambassador of the Creative Recreation brand. We are confident this exciting partnership will advance Creative Recreations’ position as a leading fashion brand with both consumers and key retailers and positively impact demand for the product line. At the same time, we’ve been successful at expanding distribution for our burgeoning Euro-Comfort brand Rocky 4Eur Sole. Unfortunately the factors that impacted our core Work, Western and Hunting categories during the second half of last year, namely warm temperatures and the softening of local economies tied to oil & gas production, created an inventory overhang in our channels of distribution that impacted fill-in of our Georgia Boot, Rocky and Durango brands during the first quarter. Therefore, we’ll continue to shift more time and resources to support our opportunities in the casual and fashion segments of the market which we believe will help reduce our dependency on weather and drive long-term growth and increased shareholder value.”

Net sales for the first quarter were $57.5 million compared to $65.5 million a year ago. Wholesale sales for the first quarter decreased to $40.2 million compared to $51.0 million for the same period in 2015. Retail sales for the first quarter were $11.5 million compared to $11.9 million for the same period last year. Military segment sales for the first quarter increased to $5.8 million compared to $2.6 million in the first quarter of 2015.

Gross margin in the first quarter of 2016 was $18.9 million, or 32.9% of sales, compared to $22.0 million, or 33.6% of sales, for the same period last year. The 70 basis point decrease was driven by the increase in military segment sales which carry lower gross margins than our wholesale and retail segments.

Selling, general and administrative (SG&A) expenses were $19.1 million, or 33.3 % of net sales, for the first quarter of 2016 compared to $19.6 million, or 29.9% of net sales, a year ago. The $0.5 million decrease in SG&A expenses was primarily related to lower variable expenses associated with the decrease in wholesale sales.

Loss from operations was $0.2 million compared to income from operations of $2.4 million, or 3.7% of net sales, a year ago.

Interest expense was $136,000 for the first quarter of 2016, versus $165,000 for the same period last year.

The Company’s funded debt decreased $15.0 million, or 41.0% to $21.6 million at March 31, 2016 versus $36.7 million at March 31, 2015.

Inventory at March 31, 2016 was $84.5 million compared with $83.1 million on the same date a year ago. The slight increase in inventories year-over-year was driven by the buildup of raw materials ahead of the ramp up in military footwear production.

Conference Call Information

The Company’s conference call to review first quarter 2016 results will be broadcast live over the internet today, Thursday, April 21, 2016 at 4:30 pm Eastern Time. The broadcast will be hosted at

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 the shifting of time and resources (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, 2015 (filed March 3, 2016). 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
March 31, 2016 December 31, 2015 March 31, 2015
Unaudited Audited Unaudited
Cash and cash equivalents $ 3,716,716 $ 3,407,140 $ 4,391,765
Trade receivables – net 38,253,999 44,549,207 54,271,919
Other receivables 597,343 583,479 618,179
Inventories 84,502,529 76,991,059 83,125,271
Income tax receivable 1,214,755 128,699 52,961
Deferred income taxes 1,031,818 1,031,818 1,291,907
Prepaid expenses   3,073,814   2,530,517   3,078,008
Total current assets 132,390,974 129,221,919 146,830,010
FIXED ASSETS – net 28,103,995 27,836,527 25,331,520
IDENTIFIED INTANGIBLES 36,514,458 36,547,873 36,649,003
OTHER ASSETS   253,621   258,812   277,305
TOTAL ASSETS $ 197,263,048 $ 193,865,131 $ 209,087,838
Accounts payable $ 15,044,942 $ 9,118,555 $ 13,894,921
Accrued other expenses:   6,085,947   5,629,661   6,027,490
Total current liabilities 21,130,889 14,748,216 19,922,411
LONG TERM DEBT 21,649,319 23,700,089 36,691,449
DEFERRED INCOME TAXES 13,000,609 13,000,609 12,928,048
DEFERRED LIABILITIES   265,262   295,676   434,625
TOTAL LIABILITIES 56,046,079 51,744,590 69,976,533
Common stock, no par value;

25,000,000 shares authorized; issued and outstanding
March 31, 2016 - 7,583,901; December 31, 2015 -
7,567,271; March 31, 2015 - 7,559,725

71,004,499 70,882,392 70,566,065
Retained earnings   70,212,470   71,238,149   68,545,240
Total shareholders' equity   141,216,969   142,120,541   139,111,305
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 197,263,048 $ 193,865,131 $ 209,087,838
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended
March 31,
2016   2015
Unaudited Unaudited
NET SALES $ 57,529,945 $ 65,451,303
COST OF GOODS SOLD   38,619,053     43,479,993  
GROSS MARGIN 18,910,892 21,971,310
ADMINISTRATIVE EXPENSES   19,131,894     19,567,947  
INCOME (LOSS) FROM OPERATIONS (221,002 ) 2,403,363
Interest expense (135,976 ) (165,076 )
Other – net   67,528     (63,340 )
Total other - net (68,448 ) (228,416 )
INCOME (LOSS) BEFORE INCOME TAXES (289,450 ) 2,174,947
INCOME TAX EXPENSE (BENEFIT)   (98,000 )   761,000  
NET INCOME (LOSS) $ (191,450 ) $ 1,413,947  
Basic $ (0.03 ) $ 0.19
Diluted $ (0.03 ) $ 0.19
Basic   7,583,170     7,559,343  
Diluted   7,583,170     7,566,698  

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

Source: Rocky Brands, Inc.