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 FOURTH QUARTER AND FISCAL 2012 RESULTS
Funded Debt Decreased 33% to $23.5 Million
Company Announces New Order to Fulfill a Contract to the U.S. Military
NELSONVILLE, Ohio, February 21, 2013 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its fourth quarter and fiscal year ended December 31, 2012.
Fourth Quarter 2012 Income and Sales
The Company reported fourth quarter net income of $2.5 million, or $0.34 per diluted share compared with net income of $0.3 million, or $0.04 per diluted share in the fourth quarter of 2011. The fourth quarter of 2011 included a one-time, non-operational charge of $3.7 million, net of tax, associated with the termination of its defined benefit pension plan. Excluding the charge, fourth quarter 2011 net income was $3.9 million, or $0.52 per diluted share. (See below for a reconciliation of fourth quarter 2011 income per diluted share on a GAAP basis to a non-GAAP basis). Fourth quarter 2012 net sales were $58.0 million versus net sales of $64.0 million a year ago.
Fiscal Year 2012 Income and Sales
The Company reported net income of $8.9 million, or $1.18 per diluted share, for fiscal year 2012, compared with net income of $8.3 million, or $1.11 per diluted share, for fiscal 2011. Excluding the aforementioned charge, fiscal year 2011 net income was $12.0 million, or $1.60 per diluted share. (See below for a reconciliation of fiscal year 2011 income per diluted share on a GAAP basis to a non-GAAP basis). For fiscal year 2012, net sales were $228.3 million versus net sales of $239.6 million in fiscal year 2011.
Military Contract
The Company also announced it has received an order to fulfill a contract to the U.S. Military to produce “Hot Weather” combat boots. The first year of the contract includes a minimum purchase amount of $3.0 million and a maximum of $15.0 million. Shipment of the boots is expected to begin in March 2013. The contract includes an option for four additional years with the same terms.
David Sharp, President and Chief Executive Officer, commented, “Our fourth quarter performance reflects the challenges facing the more weather sensitive areas of our business as a second consecutive winter of mild temperatures tapered demand for insulated, waterproof boots. In an effort to mitigate the impact of weather and further diversify our operations, we’ve been developing new product lines with good success evidenced by the increase in Durango lifestyle and western sales which were both up 44% in 2012. Based on the momentum of these two categories, combined with other growth vehicles, including a private label program with one of our largest wholesale accounts and a recently awarded military contract, we believe we are well positioned to generate solid top-line expansion in the first half of 2013. Looking further out, we remain confident that the adjustments we’re making to the business will allow us to grow sales annually on a consistent basis and leverage costs to drive improved profitability and greater shareholder value.”
Fourth Quarter Review
Net sales for the fourth quarter were $58.0 million compared to $64.0 million a year ago. Wholesale sales for the fourth quarter were $46.0 million compared to $51.7 million for the same period in 2011. Retail sales for the fourth quarter increased to $12.0 million compared to $11.8 million for the same period last year. There were no military segment sales for the fourth quarter compared to $0.4 million in the fourth quarter of 2011.
Gross margin in the fourth quarter of 2012 was $20.7 million, or 35.7% of sales, compared to $22.5 million, or 35.1% of sales, for the same period last year. The 60 basis point increase was driven by higher retail gross margins versus the year ago period.
Selling, general and administrative (SG&A) expenses were $16.8 million, or 28.9% of net sales, for the fourth quarter of 2012 compared to $16.7 million, or 26.2% of net sales, a year ago.
Income from operations was $3.9 million, or 6.8% of net sales, compared to $5.7 million, or 8.9% of net sales, excluding the aforementioned charge associated with the termination of the defined benefit pension plan, in the prior year period.
Interest expense was $0.2 million for the fourth quarter of 2012, versus $0.2 million for the same period last year.
The Company’s funded debt decreased 33.0% to $23.5 million at December 31, 2012 versus $35.0 million at December 31, 2011.
Inventory increased 3.3% to $67.2 million at December 31, 2012 compared with $65.0 million on the same date a year ago.
Reconciliation of Income per Diluted Share on a GAAP Basis to a Non-GAAP Basis
| Three Months Ended December 31, 2011 | Year Ended December 31, 2011 | |||||||||||||||||||||||
| GAAP Basis | Pension Plan Termination | Non-GAAP Basis | GAAP Basis | Pension Plan Termination | Non-GAAP Basis | |||||||||||||||||||
| Income before income taxes | $ | 276,881 | $ | 5,280,998 | $ | 5,557,879 | $ | 12,034,464 | $ | 5,280,998 | $ | 17,315,462 | ||||||||||||
| Income tax expense/(benefit) | 3,569 | (1,628,495 | ) | 1,632,064 | 3,727,569 | (1,628,495 | ) | 5,356,064 | ||||||||||||||||
| Net income | $ | 273,312 | $ | 3,652,503 | $ | 3,925,815 | $ | 8,306,895 | $ | 3,652,503 | $ | 11,959,398 | ||||||||||||
| Income per share - Diluted | $ | 0.04 | $ | 0.49 | $ | 0.52 | $ | 1.11 | $ | 0.49 | $ | 1.60 | ||||||||||||
Conference Call Information
The Company’s conference call to review fourth quarter and fiscal 2012 results will be broadcast live over the internet today, Thursday, February 21, 2013 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® and Lehigh® and the licensed brands Michelin® and Mossy Oak®. Rocky Brands is proud to supply footwear to the United States military. For more information, visit www.RockyBrands.com.
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 the expected shipment of boots under the contract with the U.S. Military (paragraph 4) and sales growth and profitability (paragraph 5). 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 reports on Form 10-Q for the quarters ended March 31, 2012 (filed April 25, 2012), June 30, 2012 (filed July 27, 2012 and amended August 6, 2012), and September 30, 2012 (filed and amended on October 31, 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.
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Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| December 31, 2012 | December 31, 2011 | |||||||
| Unaudited | Audited | |||||||
| ASSETS: | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 4,022,579 | $ | 3,650,291 | ||||
| Trade receivables – net | 44,555,057 | 45,008,793 | ||||||
| Other receivables | 575,984 | 946,686 | ||||||
| Inventories | 67,196,245 | 65,019,048 | ||||||
| Income tax receivable | - | 1,164,664 | ||||||
| Deferred income taxes | 1,252,030 | 1,154,040 | ||||||
| Prepaid expenses | 2,127,726 | 2,561,941 | ||||||
| Total current assets | 119,729,621 | 119,505,463 | ||||||
| FIXED ASSETS – net | 24,252,465 | 23,557,102 | ||||||
| IDENTIFIED INTANGIBLES | 30,498,802 | 30,493,107 | ||||||
| OTHER ASSETS | 363,527 | 510,293 | ||||||
| TOTAL ASSETS | $ | 174,844,415 | $ | 174,065,965 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 9,930,518 | $ | 5,696,363 | ||||
| Accrued expenses: | ||||||||
| Taxes - other | 704,064 | 609,992 | ||||||
| Income tax payable | 335,210 | - | ||||||
| Other | 3,324,668 | 4,624,167 | ||||||
| Total current liabilities | 14,294,460 | 10,930,522 | ||||||
| LONG TERM DEBT | 23,461,340 | 35,000,000 | ||||||
| DEFERRED INCOME TAXES | 11,148,333 | 10,987,395 | ||||||
| DEFERRED LIABILITIES | 303,406 | 488,437 | ||||||
| TOTAL LIABILITIES | 49,207,539 | 57,406,354 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock, no par value; | ||||||||
| 25,000,000 shares authorized; issued and outstanding December | ||||||||
| 31, 2012 - 7,503,568; December 31, 2011 - 7,489,995 | 69,694,770 | 69,572,270 | ||||||
| Retained earnings | 55,942,106 | 47,087,341 | ||||||
| Total shareholders' equity | 125,636,876 | 116,659,611 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 174,844,415 | $ | 174,065,965 | ||||
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Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Audited | |||||||||||||
| NET SALES | $ | 58,043,987 | $ | 63,989,643 | $ | 228,317,663 | $ | 239,599,096 | ||||||||
| COST OF GOODS SOLD | 37,313,685 | 41,532,318 | 148,031,073 | 151,668,341 | ||||||||||||
| GROSS MARGIN | 20,730,302 | 22,457,325 | 80,286,590 | 87,930,755 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling, general and administrative expenses | 16,799,780 | 16,744,251 | 66,679,761 | 69,852,696 | ||||||||||||
| Pension termination charges | - | 5,280,998 | - | 5,280,998 | ||||||||||||
| Total operating expenses | 16,799,780 | 22,025,249 | 66,679,761 | 75,133,694 | ||||||||||||
| INCOME FROM OPERATIONS | 3,930,522 | 432,076 | 13,606,829 | 12,797,061 | ||||||||||||
| OTHER INCOME AND (EXPENSES): | ||||||||||||||||
| Interest expense | (183,671 | ) | (218,667 | ) | (650,873 | ) | (979,511 | ) | ||||||||
| Other – net | (11,575 | ) | 63,472 | 131,463 | 216,914 | |||||||||||
| Total other - net | (195,246 | ) | (155,195 | ) | (519,410 | ) | (762,597 | ) | ||||||||
| INCOME BEFORE INCOME TAXES | 3,735,276 | 276,881 | 13,087,419 | 12,034,464 | ||||||||||||
| INCOME TAX EXPENSE | 1,187,199 | 3,569 | 4,232,654 | 3,727,569 | ||||||||||||
| NET INCOME | $ | 2,548,077 | $ | 273,312 | $ | 8,854,765 | $ | 8,306,895 | ||||||||
| INCOME PER SHARE | ||||||||||||||||
| Basic | $ | 0.34 | $ | 0.04 | $ | 1.18 | $ | 1.11 | ||||||||
| Diluted | $ | 0.34 | $ | 0.04 | $ | 1.18 | $ | 1.11 | ||||||||
| WEIGHTED AVERAGE NUMBER OF | ||||||||||||||||
| COMMON SHARES OUTSTANDING | ||||||||||||||||
| Basic | 7,503,568 | 7,489,995 | 7,503,494 | 7,486,655 | ||||||||||||
| Diluted | 7,503,568 | 7,489,995 | 7,503,494 | 7,487,196 | ||||||||||||
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