Exhibit 99
ROCKY BRANDS, INC.
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Company Contact:
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Jim McDonald
Chief Financial Officer
(740) 753-1951 |
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Investor Relations:
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Integrated Corporate Relations, Inc.
Brendon Frey/Chad Jacobs
(203) 682-8200 |
ROCKY BRANDS, INC. ANNOUNCES SECOND QUARTER FISCAL 2007 RESULTS
— Company Announces New Order to Fulfill a Contract to the U.S. Military —
— Rocky Brands to Consolidate Distribution Centers —
NELSONVILLE, Ohio, July 27, 2007 — Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial
results for its second quarter ended June 30, 2007.
For the second quarter of 2007, net sales increased 2.6% to $58.8 million versus net sales of $57.3
million in the second quarter of 2006. The Company reported a net loss of $1.4 million, or ($0.25)
per diluted share versus a net loss of $0.2 million or ($0.04) per diluted share a year ago. The
net loss for the second quarter of 2007 includes a one time non-cash charge of approximately $0.8
million, or $0.09 per diluted share after tax, due to the required write off of prepaid financing
costs related to the refinancing of its term loans as compared to a $0.4 million, or $0.05 per
diluted share after tax, charge for a similar write off in second quarter 2006.
Mike Brooks, Chairman and Chief Executive Officer, commented, “Our second quarter performance was
negatively impacted by weaker than expected wholesale revenues, partially offset by a double digit
sales gain in our retail division. At the same time, an increase in production costs coupled with
a greater level of closeouts further reduced our earnings compared
with a year ago. We continue to be confident about our growth prospects during
the back half of the year and we remain comfortable with our previously issued guidance for fiscal
2007.”
Military Contract
The Company also announced it has received an order to fulfill a contract to the U.S. Military to
produce “Hot Weather” boots for approximately $6.4 million. Shipment of the boots is expected to
begin in late 2007 with an estimated completion date of late 2008. The contract includes the
option for four additional years at the same amount.
Mike Brooks added, “We are very pleased to have received this order from the military which will
allow us to better utilize our Company operated production facilities.”
Second Quarter Results
Net sales for the second quarter increased to $58.8 million compared to $57.3 million a year ago.
The increase in sales is primarily attributable to a 16.6% increase in retail revenues offset by a
2.7% decrease in wholesale sales.
Gross margin in the second quarter of 2007 was $23.9 million, or 40.7% of sales, compared to $24.1
million or 42.0% 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, combined with higher
production costs and an increase in closeout sales versus a year ago.
Selling, general and administrative (SG&A) expenses were $22.8 million, or 38.8% of sales, for the
second quarter of 2007 compared to $21.5 million, or 37.4% 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 $1.1 million, or 1.9% of net sales, for the period compared to $2.6
million, or 4.6% of net sales, in the prior year.
Funded Debt and Interest Expense
The Company’s funded debt at June 30, 2007 was $102.7 million versus $109.7 million at June 30,
2006. Interest expense increased to $3.3 million for the second quarter of 2007 versus $3.0
million for the same period last year. The increase in interest expense was due to the write off
of prepaid financing costs related to the refinancing of the company’s term loans.
Inventory
Inventory decreased $10.3 million, or 11.0%, to $84.0 million at June 30, 2007 compared with $94.3
million on the same date a year ago. The decrease in inventory is due to our focus on improved
inventory management through the scheduling of receipts to more closely coincide with projected
shipments and the reduction of discontinued products.
Distribution Consolidation
In an ongoing effort to further reduce costs and improve operating efficiencies, the Company is
consolidating its distribution and warehousing. Beginning in 2008, Rocky Brands will distribute
products in the U.S. solely from its 196,000 square foot facility in Logan, Ohio, and no longer
utilize its leased facility in Tunkhannock, Pennsylvania. At the same time, Rocky Brands has signed
a letter of intent with Kane Distribution, which currently manages the Pennsylvania facility, to
serve as a third-party logistics partner to manage and operate its combined distribution center in
Ohio.
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.
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®,
Georgia Boot®, Durango®, Lehigh®, and the licensed brands Dickies®, Zumfoot® and Michelin®.
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 growth prospects (paragraph 3), distribution consolidation (paragraph 12)
and expected 2007 revenues and earnings (paragraph 13). 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) and the Company’s quarterly report on Form 10-Q for the quarter ended March
31, 2007 (filed May 9, 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.