Rocky Brands, Inc. Announces 2018 First Quarter Results

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NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (NASDAQ:RCKY) today announced financial results for its first quarter ended March 31, 2018.

First Quarter 2018 Sales and Income

First quarter net sales were $61.4 million compared to $63.1 million in the first quarter of 2017. The Company reported first quarter net income of $3.3 million, or $0.44 per diluted share compared to a net income of $1.5 million, or $0.20 per diluted share in the first quarter of 2017.

Jason Brooks, President and Chief Executive Officer, commented, “The new year is off to a strong start. Our wholesale and retail divisions continue to benefit from the strategies we’ve implemented to drive improved full price selling across our core work, western and outdoor categories. At the same time, our commercial military business grew double digits over the same period last year as our domestic and international expansion plans gain further traction. The growth in commercial military sales partially offset the expected top-line headwinds from our contract military business while also helping expand gross margins through increased productivity at our company-owned manufacturing facilities. We are very pleased with our recent performance and the Company’s strong financial position. That said, our sights are firmly focused on the future and on continuing to deliver enhanced profitability and greater value for our shareholders.”

First Quarter Review

Net sales for the first quarter were $61.4 million compared to $63.1 million a year ago. Wholesale sales for the first quarter increased 3.2% to $40.4 million compared to $39.2 million for the same period in 2017. Retail sales for the first quarter increased 10.0% to $13.1 million compared to $11.9 million for the same period last year. Military segment sales for the first quarter were $7.9 million compared to $12.0 million in the first quarter of 2017.

Gross margin in the first quarter of 2018 increased to $21.0 million, or 34.2% of sales, compared to $19.7 million, or 31.3% of sales, for the same period last year. The 290 basis point increase was driven by higher wholesale and military margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.

Selling, general and administrative (SG&A) expenses decreased to $16.7 million, or 27.3% of net sales, for the first quarter of 2018 compared to $17.4 million, or 27.6% of net sales, a year ago. The $0.6 million decrease in SG&A expenses was primarily related to the reduction in expenses related to the Creative Recreation brand, which was sold in the fourth quarter of 2017.

Income from operations increased 78.7% to $4.2 million, or 6.9% of net sales compared to income from operations of $2.4 million a year ago.

Interest expense was $47,000 for the first quarter of 2018, versus $90,000 for the same period last year.

Income tax expense was estimated at 20.5% for the first quarter of 2018, compared to 34.0% for the first quarter of 2017 due to the recently enacted Tax Cuts and Jobs Act (TCJA).

The Company had no funded debt at March 31, 2018 versus $5.2 million at March 31, 2017.

Inventory at March 31, 2018 decreased 5.3% to $65.2 million compared to $68.8 million on the same date a year ago.

Conference Call Information

The Company’s conference call to review first quarter 2018 results will be broadcast live over the internet today, Tuesday, April 24, 2018 at 4:30 pm Eastern Time. The broadcast will be hosted at http://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®, Georgia Boot®, Durango®, Lehigh®, 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 our future delivery of enhanced profitability and greater value to our shareholders (paragraph 2). 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, 2017 (filed March 12, 2018). 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,    

December 31,

    March 31,
2018 2017 2017
Unaudited Audited Unaudited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 10,115,863 $ 3,680,776 $ 2,693,078
Trade receivables, net 41,231,333 45,027,002 39,131,277
Contract receivables 13,518,203 - -
Other receivables 410,570 806,468 768,729
Inventories 65,151,332 65,622,432 68,819,390
Income tax receivable 996,563 1,849,237 510,223
Prepaid expenses 2,442,001 2,199,648 2,619,898
Total current assets 133,865,865 119,185,563 114,542,595
PROPERTY, PLANT & EQUIPMENT – net 23,737,918 23,781,001 25,633,199
IDENTIFIED INTANGIBLES 30,303,843 30,314,749 33,383,261
OTHER ASSETS 190,292 197,977 225,670
TOTAL ASSETS $ 188,097,918 $ 173,479,290 $ 173,784,725
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 14,130,491 $ 12,982,535 $ 14,620,330
Contract liabilities 13,518,203 - -
Accrued expenses:
Salaries and wages 1,788,471 1,754,681 1,741,222
Taxes - other 94,338 599,793 692,267
Accrued freight 712,488 770,219 407,428
Commissions 415,464 455,845 401,663
Accrued duty 2,260,540 2,160,847 1,994,870
Other 1,182,746 1,301,931 1,302,558
Total current liabilities 34,102,741 20,025,851 21,160,338
LONG TERM DEBT - 2,199,423 5,240,000
LONG TERM TAXES PAYABLE 2,286,512 2,286,512 -
DEFERRED INCOME TAXES 7,726,234 7,726,234 11,365,800
DEFERRED LIABILITIES 154,736 148,408 176,219
TOTAL LIABILITIES 44,270,223 32,386,428 37,942,357
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding March 31, 2018 - 7,406,801; December 31, 2017 - 7,398,654 and March 31, 2017 - 7,435,467 69,272,506 68,973,927 69,362,641
Retained earnings 74,555,189 72,118,935 66,479,727
Total shareholders' equity 143,827,695 141,092,862 135,842,368
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 188,097,918 $ 173,479,290 $ 173,784,725
 
 
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
 
  Three Months Ended
March 31,
2018     2017
Unaudited Unaudited
NET SALES $ 61,386,673 $ 63,072,954
COST OF GOODS SOLD 40,421,491   43,324,874  
GROSS MARGIN 20,965,182 19,748,080
 
OPERATING EXPENSES 16,737,507   17,381,909  
 
INCOME FROM OPERATIONS 4,227,675 2,366,171
 
OTHER EXPENSES:
Interest expense (46,741 ) (90,466 )
Other – net (91,823 ) (9,764 )
Total other - net (138,564 ) (100,230 )
 
INCOME BEFORE INCOME TAXES 4,089,111 2,265,941
 
INCOME TAX EXPENSE 838,000   770,000  
 
NET INCOME $ 3,251,111   $ 1,495,941  
 
INCOME PER SHARE
Basic $ 0.44 $ 0.20
Diluted $ 0.44 $ 0.20
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 7,406,620   7,435,000  
Diluted 7,431,071   7,436,788  

Rocky Brands, Inc.
Tom Robertson, (740) 753-1951
Chief Financial Officer
or
Investor Relations:
ICR, Inc.
Brendon Frey, (203) 682-8200

Source: Rocky Brands, Inc.

Released April 24, 2018