United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-34382
ROCKY BRANDS, INC.
(Exact name of Registrant as specified in its charter)
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Ohio | | No. 31-1364046 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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39 East Canal Street, Nelsonville, Ohio 45764 |
(Address of principal executive offices, including zip code) |
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Registrant's telephone number, including area code: (740) 753-9100 |
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Title of class | | Trading symbol | | Name of exchange on which registered |
Common Stock - No Par Value | | RCKY | | Nasdaq |
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in 12b-2 of the Exchange Act.
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¨ Large accelerated filer | | x Accelerated filer |
¨ Non-accelerated filer | | x Smaller reporting company |
| | ¨ Emerging growth company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
There were 7,242,431 shares of the Registrant's Common Stock outstanding on October 31, 2020.
PART 1 – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
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| | | September 30, | | December 31, | | September 30, |
| | | 2020 | | 2019 | | 2019 |
ASSETS: | | | | | | | |
CURRENT ASSETS: | | | | | | | |
Cash and cash equivalents | | $ | 19,947 | $ | 15,518 | $ | 6,440 |
Trade receivables – net | | | 49,188 | | 45,585 | | 50,700 |
Contract receivables | | | - | | 4,746 | | 2,036 |
Other receivables | | | 364 | | 366 | | 310 |
Inventories – net | | | 80,655 | | 76,731 | | 82,881 |
Income tax receivable | | | - | | 150 | | - |
Prepaid expenses | | | 3,611 | | 3,030 | | 2,656 |
Total current assets | | | 153,765 | | 146,126 | | 145,023 |
LEASED ASSETS | | | 1,399 | | 1,743 | | 1,781 |
PROPERTY, PLANT & EQUIPMENT – net | | | 31,325 | | 27,423 | | 25,150 |
IDENTIFIED INTANGIBLES – net | | | 30,216 | | 30,240 | | 30,248 |
OTHER ASSETS | | | 355 | | 294 | | 293 |
TOTAL ASSETS | | $ | 217,060 | $ | 205,826 | $ | 202,495 |
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LIABILITIES AND SHAREHOLDERS' EQUITY: | | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Accounts payable | | $ | 23,834 | $ | 15,776 | $ | 20,531 |
Contract liabilities | | | - | | 4,746 | | 1,936 |
Accrued expenses: | | | | | | | |
Salaries and wages | | | 3,813 | | 3,044 | | 2,791 |
Taxes - other | | | 789 | | 967 | | 624 |
Accrued freight | | | 729 | | 867 | | 495 |
Commissions | | | 544 | | 608 | | 488 |
Accrued duty | | | 4,586 | | 3,824 | | 2,597 |
Income tax payable | | | 422 | | - | | 19 |
Other | | | 1,563 | | 1,702 | | 1,766 |
Total current liabilities | | | 36,280 | | 31,534 | | 31,247 |
LONG-TERM TAXES PAYABLE | | | 169 | | 169 | | 169 |
LONG-TERM LEASE | | | 833 | | 1,158 | | 1,188 |
DEFERRED INCOME TAXES | | | 8,108 | | 8,108 | | 7,780 |
DEFERRED LIABILITIES | | | 238 | | 201 | | 230 |
TOTAL LIABILITIES | | | 45,628 | | 41,170 | | 40,614 |
SHAREHOLDERS' EQUITY: | | | | | | | |
Common stock, no par value; | | | | | | | |
25,000,000 shares authorized; issued and outstanding September 30, 2020 - 7,276,379; December 31, 2019 - 7,354,970 and September 30, 2019 - 7,403,219 | | | 66,604 | | 67,993 | | 69,273 |
Retained earnings | | | 104,828 | | 96,663 | | 92,608 |
Total shareholders' equity | | | 171,432 | | 164,656 | | 161,881 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 217,060 | $ | 205,826 | $ | 202,495 |
See Notes to Unaudited Condensed Consolidated Financial Statements
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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| | Three Months Ended | | Nine Months Ended |
| | September 30, | | September 30, |
| | 2020 | | 2019 | | 2020 | | 2019 |
NET SALES | $ | 77,785 | $ | 67,179 | $ | 189,691 | $ | 195,067 |
COST OF GOODS SOLD | | 47,952 | | 42,165 | | 121,077 | | 125,633 |
GROSS MARGIN | | 29,833 | | 25,014 | | 68,614 | | 69,434 |
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OPERATING EXPENSES | | 20,175 | | 18,027 | | 54,344 | | 54,004 |
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INCOME FROM OPERATIONS | | 9,658 | | 6,987 | | 14,270 | | 15,430 |
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OTHER (EXPENSES) INCOME | | (55) | | 43 | | (112) | | 160 |
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INCOME BEFORE INCOME TAXES | | 9,603 | | 7,030 | | 14,158 | | 15,590 |
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INCOME TAX EXPENSE | | 1,992 | | 1,414 | | 2,917 | | 3,212 |
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NET INCOME | $ | 7,611 | $ | 5,616 | $ | 11,241 | $ | 12,378 |
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INCOME PER SHARE | | | | | | | | |
Basic | $ | 1.04 | $ | 0.76 | $ | 1.54 | $ | 1.67 |
Diluted | $ | 1.04 | $ | 0.75 | $ | 1.53 | $ | 1.66 |
WEIGHTED AVERAGE NUMBER OF | | | | | | | | |
COMMON SHARES OUTSTANDING | | | | | | | | |
Basic | | 7,306 | | 7,400 | | 7,323 | | 7,392 |
Diluted | | 7,336 | | 7,455 | | 7,352 | | 7,443 |
See Notes to Unaudited Condensed Consolidated Financial Statements
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
(In thousands, except per share amounts)
(Unaudited)
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| Common Stock and | | Accumulated | | | | |
| Additional Paid-in Capital | | Other | | | | Total |
| Shares | | | | Comprehensive | | Retained | | Shareholders' |
| Outstanding | | Amount | | Income | | Earnings | | Equity |
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BALANCE - December 31, 2018 | 7,368 | $ | 68,387 | $ | - | $ | 83,188 | $ | 151,575 |
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NINE MONTHS ENDED SEPTEMBER 30, 2019 | | | | | | | | | |
Net income | | | | | | $ | 3,605 | $ | 3,605 |
Dividends paid on common stock ($0.12 per share) | | | | | | | (886) | | (886) |
Repurchase of common stock | - | | - | | | | | | - |
Stock issued for options exercised, including tax benefits | 17 | $ | 294 | | | | | | 294 |
Stock compensation expense | 6 | | 168 | | | | | | 168 |
BALANCE - March 31, 2019 | 7,391 | $ | 68,849 | $ | - | $ | 85,907 | $ | 154,756 |
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Net income | | | | | | $ | 3,156 | $ | 3,156 |
Dividends paid on common stock ($0.14 per share) | | | | | | | (1,035) | | (1,035) |
Repurchase of common stock | - | | - | | | | | | - |
Stock issued for options exercised, including tax benefits | - | | - | | | | | | - |
Stock compensation expense | 3 | $ | 164 | | | | | | 164 |
BALANCE - June 30, 2019 | 7,394 | $ | 69,013 | $ | - | $ | 88,028 | $ | 157,041 |
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Net income | | | | | | $ | 5,616 | $ | 5,616 |
Dividends paid on common stock ($0.14 per share) | | | | | | | (1,036) | | (1,036) |
Repurchase of common stock | - | | - | | | | | | - |
Stock issued for options exercised, including tax benefits | 7 | $ | 96 | | | | | | 96 |
Stock compensation expense | 2 | | 164 | | | | | | 164 |
BALANCE - September 30, 2019 | 7,403 | $ | 69,273 | $ | - | $ | 92,608 | $ | 161,881 |
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BALANCE - December 31, 2019 | 7,355 | $ | 67,993 | $ | - | $ | 96,663 | $ | 164,656 |
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NINE MONTHS ENDED SEPT 30, 2020 | | | | | | | | | |
Net income | | | | | | $ | 1,188 | $ | 1,188 |
Dividends paid on common stock ($0.14 per share) | | | | | | | (1,030) | | (1,030) |
Repurchase of common stock | (50) | $ | (1,000) | | | | | | (1,000) |
Stock issued for options exercised, including tax benefits | - | | - | | | | | | - |
Stock compensation expense | 4 | | 202 | | | | | | 202 |
BALANCE - March 31, 2020 | 7,309 | $ | 67,195 | $ | - | $ | 96,821 | $ | 164,016 |
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Net income | | | | | | $ | 2,442 | $ | 2,442 |
Dividends paid on common stock ($0.14 per share) | | | | | | | (1,023) | | (1,023) |
Repurchase of common stock | - | | - | | | | | | - |
Stock issued for options exercised, including tax benefits | - | | - | | | | | | - |
Stock compensation expense | 3 | $ | 194 | | | | | | 194 |
BALANCE - June 30, 2020 | 7,312 | $ | 67,389 | $ | - | $ | 98,240 | $ | 165,629 |
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Net income | | | | | | $ | 7,611 | $ | 7,611 |
Dividends paid on common stock ($0.14 per share) | | | | | | | (1,023) | | (1,023) |
Repurchase of common stock | (41) | $ | (1,004) | | | | | | (1,004) |
Stock issued for options exercised, including tax benefits | 2 | | 29 | | | | | | 29 |
Stock compensation expense | 3 | | 190 | | | | | | 190 |
BALANCE - September 30, 2020 | 7,276 | $ | 66,604 | $ | - | $ | 104,828 | $ | 171,432 |
See Notes to Unaudited Condensed Consolidated Financial Statements