Rocky Brands, Inc. Announces Fourth Quarter and Full Year 2010 Results
Net Sales Increased 8.2% for the Quarter and 10.2% for the Full Year
Diluted EPS Improved to $0.41 for the Quarter and $1.14 for the Full Year
NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its fourth quarter and fiscal year ended December 31, 2010.
For the fourth quarter of 2010, net sales increased 8.2% to $66.7 million versus net sales of $61.7 million in the fourth quarter of 2009. The Company reported net income of $3.0 million, or $0.41 per diluted share, in the fourth quarter of 2010, versus net income of $0.9 million, or $0.16 per diluted share, for the fourth quarter of 2009.
For fiscal 2010, net sales increased 10.2% to $252.8 million versus net sales of $229.5 million in fiscal 2009. The Company reported net income of $7.7 million, or $1.14 per diluted share, in 2010, versus net income of $1.2 million, or $0.21 per diluted share, in 2009.
Mike Brooks, Chairman and Chief Executive Officer, commented "We ended the year with another strong performance that exceeded internal and external expectations. Our strategic efforts to grow the top line resulted in wholesale sales being up 14% for the quarter and 8% for the full year. The consumer response to our new product introductions and brand extensions has been positive and is fueling additional demand across our account base. In addition to our sales increase, we reduced our operating expenses 5% in 2010 and more than 17% over the past two years. Lastly, we recently completed a successful recapitalization that strengthened our balance sheet and will significantly lower our interest expense going forward. These recent accomplishments have us well positioned for profitable growth in 2011 and we look forward to returning even greater value to our shareholders in the years ahead."
Fourth Quarter Review
Net sales for the fourth quarter increased 8.2% to $66.7 million compared to $61.7 million a year ago. Wholesale sales for the fourth quarter increased 14.4% to $52.5 million compared to $45.9 million for the same period in 2009. Retail sales for the fourth quarter were $12.4 million compared to $12.5 million for the same period last year. Military segment sales for the fourth quarter were $1.8 million versus $3.3 million for the same period in 2009.
Gross margin in the fourth quarter of 2010 was $24.3 million, or 36.5% of sales compared to $22.0 million, or 35.7% for the same period last year. The 80 basis point increase is primarily due to the increase in wholesale sales which carry higher gross margins than our military segment.
Operating expenses were $19.0 million, or 28.4% of sales, for the fourth quarter of 2010 compared to $19.1 million, or 31.0% of sales, a year ago.
Income from operations increased to $5.4 million, or 8.1% of sales, for the period compared to income from operations of $2.9 million, or 4.7% sales, in the prior year.
Interest expense was $1.7 million for the fourth quarter of 2010 versus $1.8 million for the same period last year. The decrease is attributable to reduced borrowings versus a year ago combined with lower interest rates as the result of the new $70 million revolving credit facility with PNC Bank signed in October 2010. This decrease was offset by a non-cash charge of approximately $1 million associated with deferred financing costs relating to the extinguishment of the previous credit facility and term loans.
The Company's funded debt decreased $20.5 million, or 36.9%, to $35.1 million at December 31, 2010 versus $55.6 million at December 31, 2009. This decrease is primarily the result of proceeds from our equity offering in May, 2010 and cash generated from operations.
Conference Call Information
The Company's conference call to review fourth quarter fiscal 2010 results will be broadcast live over the internet today, Tuesday, February 15, 2011 at 4:30 pm Eastern Time. The broadcast will be hosted at http://www.investquest.com/iq/r/rcky.
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(R), Georgia Boot(R), Durango(R), Lehigh(R), and the licensed brands Michelin(R) and Mossy Oak(R).
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
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 future shareholder returns (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, 2009 (filed March 2, 2010) and the Company's quarterly reports on Form 10-Q for the quarters ended March 31, 2010 (filed May 3, 2010), June 30, 2010 (filed August 3, 2010), and September 30, 2010 (filed October 28, 1010). 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
December 31, 2010 December 31, 2009
Unaudited Audited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 4,362,531 $ 1,797,093
Trade receivables - net 47,593,807 45,831,558
Other receivables 911,103 1,476,643
Inventories 58,852,556 55,420,467
Deferred income taxes 1,218,101 1,475,695
Prepaid expenses 1,793,852 1,309,138
Total current assets 114,731,950 107,310,594
FIXED ASSETS - net 22,129,282 22,669,876
IDENTIFIED INTANGIBLES 30,495,485 30,516,910
OTHER ASSETS 1,222,712 2,892,683
TOTAL ASSETS $ 168,579,429 $ 163,390,063
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 9,024,851 $ 6,781,534
Current maturities - long term debt 487,480 511,870
Accrued expenses:
Taxes - other 590,217 440,223
Income tax payable 422,229 26,242
Other 6,050,964 5,226,749
Total current liabilities 16,575,741 12,986,618
LONG TERM DEBT - less current 34,608,338 55,079,776
maturities
DEFERRED INCOME TAXES 9,374,685 9,071,639
DEFERRED LIABILITIES 3,017,107 3,774,356
TOTAL LIABILITIES 63,575,871 80,912,389
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued
and outstanding December 31, 2010 - 69,052,101 54,598,104
7,426,787; December 31, 2009 -
5,576,465
Accumulated other comprehensive loss (2,828,989 ) (3,217,144 )
Retained earnings 38,780,446 31,096,714
Total shareholders' equity 105,003,558 82,477,674
TOTAL LIABILITIES AND SHAREHOLDERS' $ 168,579,429 $ 163,390,063
EQUITY
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended Years Ended
December 31, December 31,
2010 2009 2010 2009
Unaudited Unaudited Unaudited Audited
NET SALES $ 66,729,979 $ 61,659,962 $ 252,792,263 $ 229,485,575
COST OF GOODS 42,397,793 39,628,552 163,419,549 144,928,219
SOLD
GROSS MARGIN 24,332,186 22,031,410 89,372,714 84,557,356
OPERATING
EXPENSES
Selling,
general and 18,955,677 18,430,127 72,303,259 75,072,208
administrative
expenses
Restructuring - 711,169 - 711,169
charges
Total
operating 18,955,677 19,141,296 72,303,259 75,783,377
expenses
INCOME FROM 5,376,509 2,890,114 17,069,455 8,773,979
OPERATIONS
OTHER INCOME AND (EXPENSES):
Interest (1,743,273 ) (1,834,608 ) (6,464,449 ) (7,500,513 )
expense
Other - net 365,762 319,957 652,213 577,856
Total other (1,377,511 ) (1,514,651 ) (5,812,236 ) (6,922,657 )
- net
INCOME BEFORE 3,998,998 1,375,463 11,257,219 1,851,322
INCOME TAXES
INCOME TAX 960,487 465,997 3,573,487 676,515
EXPENSE
NET INCOME $ 3,038,511 $ 909,466 $ 7,683,732 $ 1,174,807
INCOME PER
SHARE
Basic $ 0.41 $ 0.16 $ 1.14 $ 0.21
Diluted $ 0.41 $ 0.16 $ 1.14 $ 0.21
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 7,417,854 5,564,408 6,747,847 5,551,382
Diluted 7,436,060 5,592,446 6,764,190 5,551,382
Source: Rocky Brands, Inc.
Released February 15, 2011
