Exhibit 99.1
ROCKY SHOES & BOOTS, INC.
Company Contact: Jim McDonald
Chief Financial Officer
(740) 753-1951
Investor Relations: Integrated Corporate Relations, Inc.
Brendon E. Frey/Chad A. Jacobs
(203) 682-8200
Media Relations: Integrated Corporate Relations, Inc.
Megan McDonnell
(203) 682-8200
ROCKY SHOES & BOOTS, INC. REPORTS RECORD FIRST QUARTER REVENUES AND EARNINGS
-- FIRST QUARTER REVENUES INCREASE 181% TO A RECORD $61.5 MILLION --
-- REPORTS RECORD FIRST QUARTER DILUTED EARNINGS PER SHARE OF $0.20 --
NELSONVILLE, Ohio, May 5, 2005 - Rocky Shoes & Boots, Inc. (Nasdaq: RCKY) today
announced record financial results for the first quarter ended March 31, 2005.
For the three months ended March 31, 2005, net sales increased 181% to a record
$61.5 million compared to $21.9 million for the corresponding period a year ago.
Net income rose to a record $1.1 million versus net income of $0.1 million and
diluted earnings per share increased to $0.20 versus $0.01 last year.
On January 6, 2005, Rocky Shoe & Boots, Inc. completed the acquisition of EJ
Footwear Group. The results for the three months ended March 31, 2005 represent
the performance of the consolidated company, while the year ago results reflect
Rocky Shoe & Boots on a stand-alone basis.
Mike Brooks, Chairman and Chief Executive Officer of Rocky Shoes & Boots,
stated, "Our record first quarter performance highlights the strength of EJ's
portfolio of brands as well as the continued growth of our Rocky branded
business. These results reflect our strategic decision to acquire EJ Footwear,
which in turn has allowed us to significantly enhance sales and earnings and
further reduce the seasonality of our business. We are very pleased with the
progress we have made integrating our two organizations and we look forward to
taking full advantage of the many synergies that still lie ahead."
FIRST QUARTER RESULTS
Net sales for the first quarter increased 181% to $61.5 million compared to
$21.9 million a year ago. The first quarter results reflect the acquisition of
EJ Footwear, which contributed $39.9 million in revenue during the three month
period ended March 31, 2005.
Gross margin in the first quarter of 2005 increased to $24.2 million, or 39.4%
of sales, from $5.6 million or 25.7% of sales, for the same period last year.
The 1370 basis point increase was primarily due to sales of EJ Footwear product
which carry a higher gross margin than Rocky products, as well as a decrease in
shipments to the U.S. military in the first quarter of fiscal 2005 compared to
the first quarter of fiscal 2004. Military boots are sold at lower gross margins
than branded products.
Selling, general and administrative (SG&A) expenses were $20.7 million, or 33.6%
of sales for the first quarter of 2005 compared to $5.3 million, or 24.3% of
sales, a year ago. The increase is primarily a result of higher SG&A associated
with the EJ Footwear business.
Income from operations increased to $3.5 million or 5.8% of net sales for the
period from $0.3 million or 1.3% of net sales in the prior year.
FUNDED DEBT AND INTEREST EXPENSE
The Company's funded debt at March 31, 2005 was $98.1 million versus $14.5
million at March 31, 2004. The year-over-year increase was principally due to
borrowings under the credit facility to fund the purchase of EJ Footwear.
Interest expense increased to $1.9 million for the quarter ended March 31, 2005
versus $0.3 million for same period last year, primarily due to the increase in
borrowings.
INVENTORY
Inventory increased to $69.3 million at March 31, 2005 compared with $35.1
million on the same date a year ago due to the acquisition of EJ Footwear.
OUTLOOK
The Company stated it remains comfortable with its previously issued guidance
for fiscal 2005 of net sales in the range of $300 million to $305 million and
earnings per share in the range of $2.55 to $2.65.
Mr. Brooks concluded, "We have begun fiscal 2005 with positive momentum and
solid financial results. We are excited about the opportunities that we have
created in the marketplace and move forward dedicated to executing a strategy
that will allow us to fully maximize the strength of our assets and expand our
business into the future."
ABOUT ROCKY SHOES & BOOTS, INC.
Rocky Shoes & Boots, Inc. designs, develops, manufactures and markets premium
quality rugged outdoor, occupational, and casual footwear, as well as branded
apparel and accessories. The Company's footwear, apparel and accessories are
marketed through several distribution channels, primarily under owned brands,
ROCKY(R) and GATES(R), and as a result of the acquisition of EJ Footwear,
GEORGIA BOOT(R), LEHIGH(R), DURANGO, and the licensed brand DICKIES(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 synergies from the EJ Footwear
acquisition (paragraph 4) and management's sales and earnings guidance for
fiscal 2005 (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, 2004. 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 SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
MARCH 31,
2005 2004
---- ----
(UNAUDITED) (UNAUDITED)
NET SALES $ 61,498,084 $ 21,882,089
COST OF GOODS SOLD 37,290,212 16,263,485
------------ ------------
GROSS MARGIN 24,207,872 5,618,604
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 20,661,683 5,327,691
------------ ------------
INCOME FROM OPERATIONS 3,546,189 290,913
OTHER INCOME AND (EXPENSES):
Interest expense (1,881,210) (258,573)
Other - net (6,630) 74,206
------------ ------------
Total other - net (1,887,840) (184,367)
------------ ------------
INCOME BEFORE INCOME TAX 1,658,349 106,546
INCOME TAX 563,895 34,095
------------ ------------
NET INCOME $ 1,094,454 $ 72,451
============ ============
NET INCOME PER SHARE
Basic $ 0.21 $ 0.02
Diluted $ 0.20 $ 0.01
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 5,163,271 4,428,023
============ ============
Diluted 5,588,653 4,971,569
============ ============
ROCKY SHOES & BOOTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2005 MARCH 31, 2004 DECEMBER 31, 2004
-------------- -------------- -----------------
(UNAUDITED) (UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,844,354 $ 1,164,802 $ 5,060,859
Trade receivables - net 50,121,610 17,657,161 27,182,198
Other receivables 1,164,271 842,220 1,114,959
Inventories 69,334,020 35,135,584 32,959,124
Deferred income taxes 1,297,850 959,810 230,151
Income taxes receivable 2,134,642 2,264,531
Prepaid expenses 1,053,732 1,132,264 588,618
------------- ------------- -------------
Total current assets 126,950,479 56,891,841 69,400,440
FIXED ASSETS - net 22,563,726 17,325,445 20,179,486
DEFERRED PENSION ASSET 1,347,825 1,499,524 1,347,824
INTANGIBLE AND OTHER ASSETS 70,275,056 4,498,312 5,777,904
------------- ------------- -------------
TOTAL ASSETS $ 221,137,086 $ 80,215,122 $ 96,705,654
============= ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 11,879,873 $ 2,082,062 $ 4,349,248
Current maturities - long-term debt 6,376,401 511,006 6,492,020
Accrued taxes - other 438,624 451,917 422,692
Accrued salaries and wages 2,310,280 644,661 1,295,722
Accrued income taxes 380,652
Accrued other 4,285,853 421,583 1,228,708
------------- ------------- -------------
Total current liabilities 25,291,031 4,491,881 13,788,390
LONG TERM DEBT - less current maturities 91,746,122 13,998,680 10,044,544
DEFERRED LIABILITIES 19,709,368 2,057,783 1,501,922
------------- ------------- -------------
TOTAL LIABILITIES 136,746,521 20,548,344 25,334,856
SHAREHOLDERS' EQUITY:
Common stock, no par value 50,284,512 36,089,849 38,399,114
Accumulated other comprehensive loss (1,077,586) (1,950,400) (1,077,586)
Retained earnings 35,183,639 25,527,329 34,049,270
------------- ------------- -------------
Total shareholders' equity 84,390,565 59,666,778 71,370,798
------------- ------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 221,137,086 $ 80,215,122 $ 96,705,654
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