Exhibit 99.1
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ROCKY BRANDS, INC. |
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Company Contact:
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Jim McDonald |
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Chief Financial Officer |
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(740) 753-1951 |
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Investor Relations:
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Integrated Corporate Relations, Inc. |
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Brendon Frey/Chad Jacobs |
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(203) 682-8200 |
ROCKY BRANDS, INC. ANNOUNCES SECOND QUARTER FISCAL 2008 RESULTS
Company Reports Second Quarter Diluted Earnings Per Share of $0.13
Wholesale Gross Margin Increased 250 Basis Points
SG&A Expenses Decreased Approximately $1.9 million
NELSONVILLE,
Ohio, July 24, 2008 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial
results for its second quarter ended June 30, 2008.
For the second quarter of 2008, net sales increased 2.9% to $60.5 million versus net sales of $58.8
million in the second quarter of 2007. The Company reported net income of $0.7 million, or $0.13
per diluted share versus a net loss of $1.4 million or ($0.25) per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, “Our second quarter performance was
highlighted by the successful execution of our continuing strategy to enhance profitability. Due
largely to more favorable sell-in terms with our retail partners and better utilization of our
company owned factories, wholesale gross margins increased 250 basis points. At the same time, we
were effective at controlling costs evidenced by the nearly $2.0 million reduction in our operating
expenses. These improvements allowed us to realize a significant increase in diluted earnings per
share versus a year ago with a modest gain in our top-line.”
Second Quarter Results
Net sales for the second quarter increased to $60.5 million compared to $58.8 million a year ago.
Wholesale sales for the second quarter were $42.5 million compared to $41.9 million for the same
period in 2007. Retail sales for the second quarter were $16.2 million compared to $16.6 million
for the same period in 2007. Military segment sales for the second quarter were $1.8 million,
compared to $0.3 million in the same period in 2007.
Gross margin in the second quarter was $24.4 million, or 40.3% of sales, compared to $23.9 million
or 40.7% of sales, for the same period last year. The prior year’s results included a $0.5 million
reimbursement of expenses incurred in prior periods related to a cancelled military contract.
Excluding this one-time reimbursement, second quarter 2007 gross margin would have been 40.0%.
Wholesale gross margin for the second quarter was $15.7 million, or 36.9% of net sales, compared to
$14.4 million, or 34.4% of net sales, in the same period last year. The 250 basis point increase
reflects an increase in sales price per unit, as well as a decrease in manufacturing costs
resulting from increased operating efficiencies. Retail gross margin for the second quarter was
$8.6 million, or 52.8% of net sales, compared to $8.9 million, or 53.6% of net sales, for the same
period in 2007. Military gross margin for the second quarter was $0.2 million, or 8.6% of net
sales, compared to $0.6 million for the same period in 2007.
Selling, general and administrative (SG&A) expenses decreased 8.4% or $1.9 million to $20.9
million, or 34.5% of sales, for the second quarter of 2008 compared to $22.8 million, or 38.8% of
sales, a year ago. The decrease in SG&A expenses is primarily result of reductions in compensation
expense and professional fees.
Income from operations increased $2.4 million or 390 basis points to $3.5 million or 5.8% of net
sales, respectively for the period compared to $1.1 million, or 1.9% of net sales, in the prior
year.
Funded Debt and Interest Expense
The Company’s funded debt at June 30, 2008 was $101.4 million versus $102.7 million at June 30,
2007. Interest expense decreased to $2.4 million for the second quarter of 2008 versus $3.3
million for the same period last year. The decrease in interest expense was primarily due to the
write off of prepaid financing costs totaling $0.8 million related to the refinancing of the
company’s term loans in the second quarter of 2007.
Inventory
Inventory increased $1.5 million, or 1.9%, to $85.5 million at June 30, 2008 compared with $84.0
million on the same date a year ago.
Mr. Brooks concluded, “We feel confident that our recent initiatives will enable us to post
continued year-over-year margin improvement and drive increased profitability over the remainder of
this year even though our top-line will be challenged. Longer-term, we are optimistic that our
portfolio of company owned and licensed brands provide us with compelling growth prospects into the
future.”
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 margin improvement, increased profitability and growth prospects (paragraph
10). 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, 2007 (filed March 6, 2008) and the Company’s quarterly report
on Form 10-Q for the quarter ended March 31, 2008 (filed May 1, 2008). 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.