Rocky Brands, Inc. Announces First Quarter Fiscal 2008 Results
NELSONVILLE, Ohio--(BUSINESS WIRE)--
Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its first quarter ended March 31, 2008.
For the first quarter of 2008, net sales decreased to $60.5 million, or 1.9% versus net sales of $61.7 million in the first quarter of 2007. Net income was $0.3 million versus net income of $0.8 million and diluted earnings per share were $0.05 compared to diluted earnings per share of $0.14 a year ago. It is important to note that the first quarter of fiscal 2007 included a one-time, after-tax reimbursement of expenses from the military of $0.4 million, or $0.07 per diluted share.
Mike Brooks, Chairman and Chief Executive Officer, commented, "Our first quarter results were in-line with our internal forecasts. In light of the challenging retail environment here in the U.S. we are encouraged by our recent performance particularly the double digit sales increase for our Lehigh retail business, as well as the continued market share gains for our licensed brand Dickies. We are also pleased with our progress toward controlling production costs and believe we are on track to deliver improved profitability this year. We move ahead focused on achieving our near-term objectives and committed to better positioning our Company for long-term sales and earnings growth."
First Quarter Results
Net sales for the first quarter decreased to $60.5 million compared to $61.7 million a year ago. The decrease was attributable to a decline in wholesale sales offset by increases in retail sales and sales to the U.S. military.
Gross profit in the first quarter of 2008 was $25.9 million, or 42.9% of sales compared to $26.1 million, or 42.3% for the same period last year. It is important to note that gross profit for the first quarter of last year included a one-time, pre-tax reimbursement of expenses from the military of $0.7 million. Excluding the reimbursement, gross margin was 41.2% in the first quarter of fiscal 2007. The year-over-year improvement in gross margin was primarily due to an increase in sales price per unit and a decrease in manufacturing costs.
Selling, general and administrative (SG&A) expenses were $23.1 million, or 38.1% of sales, for the first quarter of 2008 compared to $22.3 million, or 36.2% of sales, a year ago. The increase in SG&A expenses was driven by additional selling and distribution expenses to support the growth of the retail division.
Income from operations was $2.9 million, or 4.8% of net sales, for the period compared to $3.8 million, or 6.1% of net sales, in the prior year. Excluding the aforementioned pre-tax reimbursement of $0.7 million from the military, income from operations a year ago was $3.1 million, or 5.0% of sales.
Funded Debt and Interest Expense
The Company's funded debt at March 31, 2008 was $94.1 million versus $89.9 million at March 31, 2007. Interest expense decreased to $2.4 million for the first quarter of 2008 versus $2.5 million for the same period last year.
Inventory
Inventory increased $8.0 million, or 11.2%, to $79.8 million at March 31, 2008 compared with $71.8 million on the same date a year ago. The increase in inventory is to support the expected growth in the retail division.
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 Outdoor Gear(R), Georgia Boot(R), Durango(R), Lehigh(R), and the licensed brands Dickies(R), Zumfoot(R) and Michelin(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 prospects in 2008 (paragraph 3) and expected growth in the retail division (paragraph 9). 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, 2007 (filed March 6, 2008). 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, 2008 December 31, 2007 March 31, 2007
Unaudited Unaudited
-------------- ----------------- --------------
ASSETS:
CURRENT ASSETS:
Cash and cash
equivalents $ 4,407,629 $ 6,537,884 $ 1,776,893
Trade receivables
- net 56,189,187 65,931,092 58,953,715
Other receivables 947,296 674,707 1,222,207
Inventories 79,841,429 75,403,664 71,831,189
Deferred income
taxes 1,952,536 1,952,536 3,902,775
Income tax
receivable 607,910 719,945 3,079,485
Prepaid expenses 3,049,971 2,226,920 1,873,910
-------------- ----------------- --------------
Total current
assets 146,995,958 153,446,748 142,640,174
FIXED ASSETS - net 23,943,273 24,484,050 23,897,559
IDENTIFIED INTANGIBLES
& GOODWILL 36,361,267 36,509,690 61,841,219
OTHER ASSETS 2,099,762 2,284,039 2,443,355
-------------- ----------------- --------------
TOTAL ASSETS $209,400,260 $216,724,527 $230,822,307
============== ================= ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 12,801,456 $ 11,908,902 $ 12,782,486
Current maturities
- long term debt 331,411 324,648 7,294,702
Accrued expenses:
Taxes - other 807,557 516,038 510,935
Other 5,859,974 5,421,083 5,014,352
-------------- ----------------- --------------
Total current
liabilities 19,800,398 18,170,671 25,602,475
LONG TERM DEBT - less
current maturities 93,768,649 103,220,384 82,567,824
DEFERRED INCOME TAXES 12,951,828 13,247,953 17,009,025
DEFERRED LIABILITIES 1,217,206 360,928 312,542
-------------- ----------------- --------------
TOTAL LIABILITIES 127,738,081 134,999,936 125,491,866
SHAREHOLDERS' EQUITY:
Common stock, no par
value;
25,000,000 shares
authorized;
issued and
outstanding March
31, 2008 -
5,508,278;
December 31, 2007
- 5,488,293;
March 31, 2007 -
5,466,543 54,144,545 53,997,960 53,649,754
Accumulated other
comprehensive loss (1,561,145) (1,051,232) (967,609)
Retained earnings 29,078,779 28,777,863 52,648,296
-------------- ----------------- --------------
Total
shareholders'
equity 81,662,179 81,724,591 105,330,441
-------------- ----------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $209,400,260 $216,724,527 $230,822,307
============== ================= ==============
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
-------------------------
2008 2007
------------ ------------
NET SALES $60,484,716 $61,657,024
COST OF GOODS SOLD 34,535,051 35,576,338
------------ ------------
GROSS MARGIN 25,949,665 26,080,686
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 23,061,487 22,322,941
------------ ------------
INCOME FROM OPERATIONS 2,888,178 3,757,745
OTHER INCOME AND (EXPENSES):
Interest expense (2,406,671) (2,498,845)
Other - net (18,592) (42,995)
------------ ------------
Total other - net (2,425,263) (2,541,840)
INCOME/(LOSS) BEFORE INCOME TAXES 462,915 1,215,905
INCOME TAX EXPENSE/(BENEFIT) 162,000 450,000
------------ ------------
NET INCOME/(LOSS) $ 300,915 $ 765,905
============ ============
NET INCOME/(LOSS) PER SHARE
Basic $ 0.05 $ 0.14
Diluted $ 0.05 $ 0.14
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 5,507,839 5,457,556
============ ============
Diluted 5,526,479 5,594,930
============ ============
Source: Rocky Brands, Inc.
Released April 24, 2008
