Rocky Brands, Inc. Announces Third Quarter Fiscal 2010 Results
Third Quarter Sales Increased 12.3% to $74.8 Million
Third Quarter Diluted EPS Increased 26.0% to $0.63
Funded Debt Decreased $30.0 Million, or 36.0% to $53.4 Million
NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its third quarter ended September 30, 2010.
For the third quarter of 2010, net sales increased 12.3% to $74.8 million versus net sales of $66.6 million in the third quarter of 2009. Net income for the third quarter of 2010 increased $1.9 million to $4.7 million, or $0.63 per diluted share versus net income of $2.8 million, or $0.50 per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, "During the third quarter we continued to experience positive business trends similar to the first six months of 2010 which allowed us once again deliver improved profitability versus the year ago period. This included higher sales levels in both our wholesales and military segments, a 40 basis point increase in wholesale gross margin, and better operating expense leverage. We are particularly pleased with our wholesale growth which is being driven by demand for our work footwear. We also recently secured a new credit facility that will further reduce our interest expense approximately $2 million next year and free up capital to expand our business. Looking ahead, we are excited about both our near and long-term growth prospects and we are confident we have the right pieces in place to capitalize on the many opportunities still in front of us."
Third Quarter Review
Net sales for the third quarter increased 12.3% to $74.8 million compared to $66.6 million a year ago. Wholesale sales for the third quarter increased 9.0% to $59.4 million compared to $54.5 million for the same period in 2009. The increase was driven primarily by growth of our work category. Retail sales for the third quarter were $11.1 million compared to $11.5 million for the same period last year. Military segment sales for the third quarter increased to $4.3 million versus $0.6 million for the same period in 2009.
Gross margin in the third quarter of 2010 was $27.2 million, or 36.4% of sales compared to $24.7 million, or 37.1% for the same period last year. The 70 basis point decline in gross margin was due to an increase in sales to the Military which carry lower gross margin than the wholesale and retail businesses.
Selling, general and administrative (SG&A) expenses were $19.2 million, or 25.6% of sales for the third quarter of 2010 compared to $18.6 million, or 27.9% of sales a year ago. The increase in SG&A expenses is primarily due to additional selling expenses and incentive accruals, which were partially offset by decreases in other expenses.
Income from operations increased 31.1% to $8.0 million, or 10.7% of net sales for the period compared to operating income of $6.1 million, or 9.2% of net sales in the prior year.
Interest expense decreased $1.0 million, or 50.0% to $1.0 million for the third quarter of 2010. The decrease is the result of debt reductions over the past 12 months combined with lower interest rates compared to the same period last year.
The Company's funded debt decreased $30.0 million, or 36.0% to $53.4 million at September 30, 2010 versus $83.4 million at September 30, 2009.
Inventory decreased 7.6% to $62.9 million at September 30, 2010 compared with $68.1 million on the same date a year ago.
Conference Call Information
The Company's conference call to review third quarter fiscal 2010 results will be broadcast live over the internet today, Thursday, October 21, 2010 at 4:30 pm Eastern Time. The broadcast will be hosted at 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(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 growth prospects (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) and June 30, 2010 (filed August 3, 2010). 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, December 31, 2009 September 30, 2009
2010
Unaudited Unaudited
ASSETS:
CURRENT ASSETS:
Cash and cash $ 3,965,906 $ 1,797,093 $ 4,002,909
equivalents
Trade receivables - 61,261,175 45,831,558 58,296,661
net
Other receivables 1,319,589 1,476,643 1,598,829
Inventories 62,913,777 55,420,467 68,065,444
Deferred income taxes 1,490,601 1,475,695 2,173,391
Income tax receivable - - 247,011
Prepaid expenses 1,494,653 1,309,138 1,323,115
Total current assets 132,445,701 107,310,594 135,707,360
FIXED ASSETS - net 22,114,258 22,669,876 23,132,489
IDENTIFIED INTANGIBLES 30,504,785 30,516,910 30,627,527
OTHER ASSETS 1,896,914 2,892,683 3,304,123
TOTAL ASSETS $ 186,961,658 $ 163,390,063 $ 192,771,499
LIABILITIES AND
SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 9,449,927 $ 6,781,534 $ 7,683,778
Current maturities - 508,376 511,870 503,841
long term debt
Accrued expenses:
Taxes - other 490,978 440,223 387,817
Income tax payable 2,280,900 26,242 -
Other 6,612,636 5,226,749 5,987,861
Total current 19,342,817 12,986,618 14,563,297
liabilities
LONG TERM DEBT - less 52,910,608 55,079,776 82,940,392
current maturities
DEFERRED INCOME TAXES 9,060,211 9,071,639 9,558,761
DEFERRED LIABILITIES 3,925,393 3,774,356 4,116,613
TOTAL LIABILITIES 85,239,029 80,912,389 111,179,063
SHAREHOLDERS' EQUITY:
Common stock, no par
value;
25,000,000 shares
authorized; issued and
outstanding September
30, 2010 - 7,409,537; 68,927,984 54,598,104 54,387,752
December 31, 2009 -
5,576,465; September
30, 2009 - 5,547,215
Accumulated other (2,947,290 ) (3,217,144 ) (2,982,564 )
comprehensive loss
Retained earnings 35,741,935 31,096,714 30,187,248
Total shareholders' 101,722,629 82,477,674 81,592,436
equity
TOTAL LIABILITIES AND $ 186,961,658 $ 163,390,063 $ 192,771,499
SHAREHOLDERS' EQUITY
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
NET SALES $ 74,760,244 $ 66,572,437 $ 186,062,284 $ 167,825,613
COST OF GOODS 47,575,649 41,856,651 121,021,756 105,299,667
SOLD
GROSS MARGIN 27,184,595 24,715,786 65,040,528 62,525,946
SELLING,
GENERAL AND
ADMINISTRATIVE 19,159,541 18,576,780 53,347,582 56,642,081
EXPENSES
INCOME/(LOSS)
FROM 8,025,054 6,139,006 11,692,946 5,883,865
OPERATIONS
OTHER INCOME
AND
(EXPENSES):
Interest (955,033 ) (1,955,485 ) (4,721,176 ) (5,665,905 )
expense
Other - net 246,334 224,442 286,451 257,899
Total other (708,699 ) (1,731,043 ) (4,434,725 ) (5,408,006 )
- net
INCOME/(LOSS)
BEFORE INCOME 7,316,355 4,407,963 7,258,221 475,859
TAXES
INCOME TAX
EXPENSE/ 2,634,000 1,626,518 2,613,000 210,518
(BENEFIT)
NET INCOME/ $ 4,682,355 $ 2,781,445 $ 4,645,221 $ 265,341
(LOSS)
INCOME/(LOSS)
PER SHARE
Basic $ 0.63 $ 0.50 $ 0.71 $ 0.05
Diluted $ 0.63 $ 0.50 $ 0.71 $ 0.05
WEIGHTED
AVERAGE NUMBER
OF
COMMON SHARES OUTSTANDING
Basic 7,407,409 5,547,215 6,522,058 5,546,993
Diluted 7,422,194 5,547,215 6,541,192 5,546,993
Source: Rocky Brands, Inc.
Released October 21, 2010
