Exhibit 99
ROCKY BRANDS, INC.
| Company Contact: | Jim McDonald | |
| Chief Financial Officer | ||
| (740) 753-1951 | ||
| Investor Relations: | ICR, Inc. | |
| Brendon Frey | ||
| (203) 682-8200 |
ROCKY BRANDS, INC. ANNOUNCES SECOND QUARTER 2012 RESULTS
NELSONVILLE, Ohio, July 24, 2012 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2012.
Second quarter 2012 net income was $0.2 million compared with $2.3 million in the second quarter of 2011 and diluted earnings per share were $0.03 compared to $0.30 during the same period last year. Second quarter net sales were $44.4 million versus net sales of $52.3 million a year ago.
On June 29, 2012, severe storms knocked out power to more than 660,000 homes and businesses in Ohio including Rocky Brand’s distribution center in Logan, OH. As a result of this power outage, Rocky Brands’ shipping capabilities were temporarily suspended which caused approximately $2.5 million of shipments to move from the second quarter into the third quarter. This had a negative impact of approximately $0.06 per share in the second quarter of 2012.
David Sharp, President and Chief Executive Officer, commented, “We faced a significant challenge at the end of the quarter with the shutdown of our distribution center. Our teams did a great job to ensure that all orders were shipped as soon as possible once power was restored early in July. Excluding the impact from this disruption, our business for the most part performed in-line with expectations however we did experience some softness in our hunting category. We believe this was primarily attributable to retailers buying closer to season and operating with leaner inventory positions compared with past years. Our work, western, and commercial military product lines continue to gain traction with the key retailers in their respective channels as new product introductions are resonating with our target consumers. Equally important, our balance sheet is in good shape with clean inventory levels and funded debt down 24% from a year ago.”
Second Quarter Review
Wholesale sales for the second quarter were $34.7 million compared to $40.8 million for the same period in 2011. The decrease is primarily the result of a reduction in sales in the hunting category as well as the temporary impact from the aforementioned power outage. The decrease in the hunting category is due to retailers buying closer to the season. Retail sales for the second quarter were $9.1 million compared to $10.9 million for the same period last year. Military segment sales for the second quarter were $0.6 million for both the second quarter of 2012 and 2011.
Gross margin in the second quarter of 2012 was $15.4 million, or 34.6% of sales compared to $20.6 million, or 39.4% for the same period last year. The decrease in gross margin was primarily due to an increase in product costs as a result of manufacturing variances in the Company’s production facility.
Selling, general and administrative (SG&A) expenses decreased 11.6% to $14.9 million or 33.5% of net sales, for the second quarter of 2012 compared to $16.9 million, or 32.2% of net sales a year ago. The $2.0 million decrease is primarily due to lower compensation expense, operating costs of our retail business, and lower advertising expenses.
Income from operations was $0.5 million, or 1.0% of net sales, compared to $3.8 million, or 7.2% of net sales, in the prior year period.
Interest expense decreased to $0.1 million for the second quarter of 2012 versus $0.3 million due to lower borrowings versus the same period a year ago.
The Company’s funded debt decreased 24.3% or $9.6 million to $29.9 million at June 30, 2012 versus $39.5 million at June 30, 2011.
Inventory at June 30, 2012 was $74.0 million compared with $74.4 million on the same date a year ago. On a year over year basis footwear units decreased 13.5%.
Conference Call Information
The Company’s conference call to review second quarter fiscal 2012 results will be broadcast live over the internet today, Tuesday, July 24, 2012 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 brands Michelin® and Mossy Oak®.
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 new product introductions (paragraph 4). 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, 2011 (filed February 28, 2012) and the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2012 (filed April 25, 2012). 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
| June 30, 2012 | December 31, 2011 | June 30, 2011 | ||||||||||
| Unaudited | Audited | Unaudited | ||||||||||
| ASSETS: | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 1,850,905 | $ | 3,650,291 | $ | 3,194,944 | ||||||
| Trade receivables – net | 36,729,487 | 45,008,793 | 41,965,418 | |||||||||
| Other receivables | 760,596 | 946,686 | 770,106 | |||||||||
| Inventories | 74,048,921 | 65,019,048 | 74,391,866 | |||||||||
| Income tax receivable | 933,293 | 1,164,664 | - | |||||||||
| Deferred income taxes | 1,154,040 | 1,154,040 | 1,218,101 | |||||||||
| Prepaid expenses | 2,240,461 | 2,561,941 | 2,783,290 | |||||||||
| Total current assets | 117,717,703 | 119,505,463 | 124,323,725 | |||||||||
| FIXED ASSETS – net | 24,822,919 | 23,557,102 | 23,501,917 | |||||||||
| IDENTIFIED INTANGIBLES | 30,490,861 | 30,493,107 | 30,504,268 | |||||||||
| OTHER ASSETS | 436,525 | 510,293 | 931,133 | |||||||||
| TOTAL ASSETS | $ | 173,468,008 | $ | 174,065,965 | $ | 179,261,043 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accounts payable | $ | 10,740,705 | $ | 5,696,363 | $ | 13,000,426 | ||||||
| Current maturities – long term debt | - | - | 6,865 | |||||||||
| Accrued expenses: | ||||||||||||
| Taxes - other | 595,214 | 609,992 | 714,528 | |||||||||
| Income tax payable | - | - | 836,171 | |||||||||
| Other | 3,024,938 | 4,624,167 | 4,194,173 | |||||||||
| Total current liabilities | 14,360,857 | 10,930,522 | 18,752,163 | |||||||||
| LONG TERM DEBT – less current maturities | 29,909,957 | 35,000,000 | 39,517,005 | |||||||||
| DEFERRED INCOME TAXES | 10,987,395 | 10,987,395 | 9,374,685 | |||||||||
| DEFERRED LIABILITIES | 488,437 | 488,437 | 3,151,262 | |||||||||
| TOTAL LIABILITIES | 55,746,646 | 57,406,354 | 70,795,115 | |||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||
| Common stock, no par value; | ||||||||||||
| 25,000,000 shares authorized; issued and outstanding June 30, 2012 - 7,503,568; December 31, 2011 - 7,489,995; June 30, 2011 - 7,489,995 | 69,694,770 | 69,572,270 | 69,546,028 | |||||||||
| Accumulated other comprehensive loss | - | - | (2,681,862 | ) | ||||||||
| Retained earnings | 48,026,592 | 47,087,341 | 41,601,762 | |||||||||
| Total shareholders' equity | 117,721,362 | 116,659,611 | 108,465,928 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 173,468,008 | $ | 174,065,965 | $ | 179,261,043 | ||||||
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| NET SALES | $ | 44,408,358 | $ | 52,282,632 | $ | 97,734,276 | $ | 104,588,907 | ||||||||
| COST OF GOODS SOLD | 29,056,731 | 31,665,304 | 64,360,568 | 64,705,634 | ||||||||||||
| GROSS MARGIN | 15,351,627 | 20,617,328 | 33,373,708 | 39,883,273 | ||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||
| ADMINISTRATIVE EXPENSES | 14,893,727 | 16,853,029 | 31,635,785 | 35,082,380 | ||||||||||||
| INCOME FROM OPERATIONS | 457,900 | 3,764,299 | 1,737,923 | 4,800,893 | ||||||||||||
| OTHER INCOME AND (EXPENSES): | ||||||||||||||||
| Interest expense | (130,606 | ) | (292,454 | ) | (274,953 | ) | (507,986 | ) | ||||||||
| Other – net | 13,270 | 34,855 | 4,281 | 47,409 | ||||||||||||
| Total other - net | (117,336 | ) | (257,599 | ) | (270,672 | ) | (460,577 | ) | ||||||||
| INCOME BEFORE INCOME TAXES | 340,564 | 3,506,700 | 1,467,251 | 4,340,316 | ||||||||||||
| INCOME TAX EXPENSE | 122,000 | 1,227,000 | 528,000 | 1,519,000 | ||||||||||||
| NET INCOME | $ | 218,564 | $ | 2,279,700 | $ | 939,251 | $ | 2,821,316 | ||||||||
| INCOME PER SHARE | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.30 | $ | 0.13 | $ | 0.38 | ||||||||
| Diluted | $ | 0.03 | $ | 0.30 | $ | 0.13 | $ | 0.38 | ||||||||
| WEIGHTED AVERAGE NUMBER OF | ||||||||||||||||
| COMMON SHARES OUTSTANDING | ||||||||||||||||
| Basic | 7,503,568 | 7,489,995 | 7,503,419 | 7,483,259 | ||||||||||||
| Diluted | 7,503,568 | 7,489,995 | 7,503,419 | 7,484,341 | ||||||||||||