Rocky Brands, Inc. Announces First Quarter Fiscal 2007 Results
NELSONVILLE, Ohio--(BUSINESS WIRE)--
Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its first quarter ended March 31, 2007.
For the first quarter of 2007, net sales increased 7.2% to $61.7 million versus net sales of $57.5 million in the first quarter of 2006. Net income was $0.8 million versus net income of $0.9 million and diluted earnings per share were $0.14 compared to diluted earnings per share of $0.16 a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, "We were pleased with our top-line performance during the first quarter which was driven by gains in our work and outdoor segments, offset by a decrease in our western business. As we expected, gross margins declined as a result of a shift in our product mix combined with our strategic decision to reduce a portion of our inventory at closeout. At the same time, we benefited from a reimbursement of expenses from the U.S. military. Overall, we are encouraged by our start to the new year and we remain on track to achieve our near and long-term objectives."
First Quarter Results
Net sales for the first quarter increased to $61.7 million compared to $57.5 million a year ago. The increase in sales is primarily attributable to year-over-year improvements in our work footwear category, coupled with an increase in our retail operations.
Gross margin in the first quarter of 2007 was $26.1 million, which included $0.7 million of a reimbursement of expenses from the military, or 42.3% of sales, compared to $24.9 million or 43.3% of sales, for the same period last year. The decline was primarily due to a decrease in sales of our western footwear, which carry higher gross margins and an increase in closeout sales versus a year ago.
Selling, general and administrative (SG&A) expenses were $22.3 million, or 36.2% of sales, for the first quarter of 2007 compared to $21.1 million, or 36.7% of sales, a year ago. The increase in SG&A expenses is partially due to additional selling expenses related to increased sales and higher professional fees.
Income from operations was $3.8 million, or 6.1% of net sales, for the period compared to $3.8 million, or 6.6% of net sales, in the prior year.
Funded Debt and Interest Expense
The Company's funded debt at March 31, 2007 was $89.9 million versus $94.1 million at March 31, 2006. Interest expense increased to $2.5 million for the first quarter of 2007 versus $2.4 million for the same period last year. The slight increase in interest expense was due to higher interest rates versus a year ago.
Inventory
Inventory decreased $11.2 million, or 13.5%, to $71.8 million at March 31, 2007 compared with $83.0 million on the same date a year ago.
Outlook
The Company stated it remains comfortable with its previously issued guidance and continues to expect fiscal 2007 revenues to increase approximately 5% over 2006 levels, and diluted earnings per share to increase approximately 35% over 2006 levels.
Mr. Brooks concluded, "We have made important progress over the past several months diversifying our business, reducing our expenses, and improving our balance sheet. While we still have much work to do we are excited about several upcoming product introductions and believe recent investments in research and development will lead to future market share gains in each of our operating segments. We are committed to capitalizing on all the opportunities we believe exist for our entire portfolio of brands and move forward more focused than ever on successfully executing our growth strategy."
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 the achievement of near and long-term objectives (paragraph 3), expected 2007 revenues and earnings (paragraph 10) and future market share gains (paragraph 11). 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, 2006 (filed March 15, 2007). 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, 2007 December 31, 2006 March 31, 2006
Unaudited Unaudited
-------------- ----------------- --------------
ASSETS:
CURRENT ASSETS:
Cash and cash
equivalents $ 1,776,893 $ 3,731,253 $ 2,082,547
Trade receivables -
net 58,953,715 65,259,580 53,556,447
Other receivables 1,222,207 1,159,444 2,236,354
Inventories 71,831,189 77,948,976 82,996,488
Deferred income
taxes 3,902,775 3,902,775 133,783
Income tax
receivable 3,079,485 3,632,808 1,160,148
Prepaid expenses 1,873,910 1,581,303 2,369,364
-------------- ----------------- --------------
Total current
assets 142,640,174 157,216,139 144,535,131
FIXED ASSETS - net 23,897,559 24,349,674 23,286,912
DEFERRED PENSION ASSET 26,998 13,564 1,537,639
IDENTIFIED INTANGIBLES
& GOODWILL 61,841,219 61,979,659 62,176,338
OTHER ASSETS 2,416,357 2,796,776 3,257,543
-------------- ----------------- --------------
TOTAL ASSETS $ 230,822,307 $ 246,355,812 $ 234,793,563
============== ================= ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 12,782,486 $ 10,162,291 $ 22,756,879
Current maturities -
long term debt 7,294,702 7,288,474 6,281,020
Accrued expenses:
Taxes - other 510,935 552,782 489,589
Other 5,014,352 3,643,503 3,952,408
-------------- ----------------- --------------
Total current
liabilities 25,602,475 21,647,050 33,479,896
LONG TERM DEBT - less
current maturities 82,567,824 103,203,107 87,828,446
DEFERRED INCOME TAXES 17,009,025 17,009,025 12,567,208
DEFERRED LIABILITIES 312,542 368,580 536,600
-------------- ----------------- --------------
TOTAL LIABILITIES 125,491,866 142,227,762 134,412,150
SHAREHOLDERS' EQUITY:
Common stock, no par
value; 25,000,000
shares authorized;
issued and
outstanding March 31,
2007 - 5,466,543;
December 31, 2006 -
5,417,198; March 31,
2006 - 5,390,473 53,649,754 53,238,841 52,425,074
Accumulated other
comprehensive loss (967,609) (993,182) -
Retained earnings 52,648,296 51,882,391 47,956,339
-------------- ----------------- --------------
Total
shareholders'
equity 105,330,441 104,128,050 100,381,413
-------------- ----------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 230,822,307 $ 246,355,812 $ 234,793,563
============== ================= ==============
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
-------------------------
2007 2006
------------ ------------
NET SALES $61,657,024 $57,525,164
COST OF GOODS SOLD 35,576,338 32,609,207
------------ ------------
GROSS MARGIN 26,080,686 24,915,957
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 22,322,941 21,109,397
------------ ------------
INCOME FROM OPERATIONS 3,757,745 3,806,560
OTHER INCOME AND (EXPENSES):
Interest expense (2,498,845) (2,369,033)
Other - net (42,995) (18,297)
------------ ------------
Total other - net (2,541,840) (2,387,330)
INCOME BEFORE INCOME TAXES 1,215,905 1,419,230
INCOME TAX EXPENSE 450,000 526,000
------------ ------------
NET INCOME $ 765,905 $ 893,230
============ ============
NET INCOME PER SHARE
Basic $ 0.14 $ 0.17
Diluted $ 0.14 $ 0.16
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic 5,457,556 5,362,953
============ ============
Diluted 5,594,930 5,615,942
============ ============
Source: Rocky Brands, Inc.
Released May 7, 2007
