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 2014 RESULTS

Second Quarter Net Sales Increased 16% to a Record $68.8 Million

 

NELSONVILLE, Ohio, July 23, 2014 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2014.

 

Second Quarter 2014 Sales and Income

Second quarter net sales increased 15.8% to $68.8 million versus net sales of $59.4 million in the second quarter of 2013. The Company reported second quarter net income of $1.5 million, or $0.20 per diluted share compared with net income of $1.8 million, or $0.24 per diluted share in the second quarter of 2013.

 

David Sharp, President and Chief Executive Officer, commented, “The investments we’ve made towards growing our brands and overall business continue to fuel record top-line results. For the second consecutive quarter each of our major wholesale categories, Work, Western, and Hunting, generated double digit sales increases on a percentage basis while the momentum in our commercial military and duty businesses accelerated following a solid start to the year. As we move into the back half of 2014, we believe we can continue to drive growth through compelling and innovative product introductions and begin delivering improved profitability through gross margin expansion and increased operating expense leverage. Our plans include capitalizing on the opportunities we believe exist for Creative Recreation within the broader casual footwear market. We are pleased with our recent accomplishments and look forward to building on our success in the quarters and years ahead.”

 

Second Quarter Review

Net sales for the second quarter increased 15.8% to $68.8 million compared to $59.4 million a year ago. Wholesale sales for the second quarter increased 23.7% to $56.7 million compared to $45.8 million for the same period in 2013. This included a 16.8% increase in wholesale sales of the Company’s legacy brands. Retail sales for the second quarter increased to $10.1 million compared to $9.8 million for the same period last year. Military segment sales for the second quarter decreased to $2.0 million compared to $3.8 million in the second quarter of 2013.

 

Gross margin in the second quarter of 2014 was $22.6 million, or 32.8% of sales, compared to $20.3 million, or 34.2% of sales, for the same period last year. The 140 basis point decrease was driven by the combination of lower wholesale margins due primarily to costs associated with the seeding program with a key retail partner we announced in the first quarter of 2014 and lower retail gross margin than a year ago resulting from the completed transition to a web based retail platform which carries lower gross margin and lower operating expenses compared to the previous mobile store structure.

 

Selling, general and administrative (SG&A) expenses were $20.0 million, or 29.1% of net sales, for the second quarter of 2014 compared to $17.4 million, or 29.4% of net sales, a year ago. The $2.6 million increase in SG&A expenses was due largely to the additional expenses associated with the Creative Recreation brand, which was acquired in December 2013, and higher compensation expense related to a new mid-year bonus program that wasn’t in place a year ago. The 30 basis point improvement in SG&A as a percent of net sales was driven by leveraging expenses on higher sales.

 

 
 

  

Income from operations was $2.5 million, or 3.7% of net sales, compared to $2.9 million, or 4.8% of net sales, a year ago.

 

Interest expense was $0.2 million for the second quarter of 2014, versus $0.1 million for the same period last year.

 

The Company’s funded debt was $43.4 million at June 30, 2014 versus $31.4 million at June 30, 2013. The majority of the increase was related to additional borrowings to fund the acquisition of Creative Recreation in the fourth quarter of 2013.

 

Inventory increased 6.5%, or $5.3 million, to $86.4 million at June 30, 2014 compared with $81.2 million on the same date a year ago. Inventory at June 30, 2014 included approximately $2.8 million associated with the acquisition of Creative Recreation. Based on current sales trends and the fall order book, the Company remains comfortable with its current inventory position.

 

Conference Call Information

The Company’s conference call to review second quarter 2014 results will be broadcast live over the internet today, Wednesday, July 23, 2014 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®, Creative Recreation®, and the licensed brand Michelin®.

 

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 sales and profitability (paragraph 3) and inventory (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, 2013 (filed March 6, 2014) and quarterly report on Form 10-Q for the quarter ended March 31, 2014 (filed May 1, 2014). 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

 

             
   June 30, 2014   December 31, 2013   June 30, 2013 
   Unaudited   Audited   Unaudited 
ASSETS:               
                
CURRENT ASSETS:               
Cash and cash equivalents  $3,960,134   $4,215,617   $2,855,524 
Trade receivables – net   54,088,664    49,069,668    46,429,928 
Other receivables   754,889    325,888    496,669 
Inventories   86,438,290    78,171,670    81,159,941 
Income tax receivable   7,039    242,228    270,878 
Deferred income taxes   1,104,050    1,104,050    1,252,030 
Prepaid expenses   2,657,619    2,529,407    2,862,360 
Total current assets   149,010,685    135,658,528    135,327,330 
FIXED ASSETS – net   27,641,771    26,205,080    24,418,143 
IDENTIFIED INTANGIBLES   36,741,214    36,807,099    30,503,659 
OTHER ASSETS   348,958    354,051    330,743 
TOTAL ASSETS  $213,742,628   $199,024,758   $190,579,875 
                
                
LIABILITIES AND SHAREHOLDERS' EQUITY:               
                
CURRENT LIABILITIES:               
Accounts payable  $18,433,803   $11,486,473   $15,252,448 
Accrued expenses:               
Taxes - other   539,919    901,116    793,439 
Other   7,272,867    5,028,850    3,972,681 
Total current liabilities   26,246,589    17,416,439    20,018,568 
                
LONG TERM DEBT   43,359,640    38,388,198    31,438,173 
DEFERRED INCOME TAXES   11,750,718    11,750,718    11,148,333 
DEFERRED LIABILITIES   293,823    255,906    255,906 
                
TOTAL LIABILITIES   81,650,770    67,811,261    62,860,980 
                
SHAREHOLDERS' EQUITY:               
Common stock, no par value;               
25,000,000 shares authorized; issued and               
outstanding  June 30, 2014 - 7,543,210; December 31, 2013 - 7,536,448; June 30, 2013 - 7,516,448   70,304,984    70,153,570    69,862,770 
Retained earnings   61,786,874    61,059,927    57,856,125 
                
Total shareholders' equity   132,091,858    131,213,497    127,718,895 
                
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $213,742,628   $199,024,758   $190,579,875 

 

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2014   2013   2014   2013 
NET SALES  $68,822,520   $59,419,751   $134,605,804   $113,135,227 
                     
COST OF GOODS SOLD   46,236,858    39,109,264    90,166,993    74,153,970 
                     
GROSS MARGIN   22,585,662    20,310,487    44,438,811    38,981,257 
                     
SELLING, GENERAL AND                    
ADMINISTRATIVE EXPENSES   20,041,283    17,441,736    40,556,822    34,605,918 
                     
INCOME FROM OPERATIONS   2,544,379    2,868,751    3,881,989    4,375,339 
                     
OTHER INCOME AND (EXPENSES):                    
Interest expense   (225,299)   (147,194)   (443,972)   (276,752)
Other – net   6,381    4,723    232    (211)
Total other - net   (218,918)   (142,471)   (443,740)   (276,963)
                     
INCOME BEFORE INCOME TAXES   2,325,461    2,726,280    3,438,249    4,098,376 
                     
INCOME TAX EXPENSE   814,000    954,000    1,203,000    1,434,000 
                     
NET INCOME  $1,511,461   $1,772,280   $2,235,249   $2,664,376 
                     
INCOME PER SHARE                    
Basic  $0.20   $0.24   $0.30   $0.35 
Diluted  $0.20   $0.24   $0.30   $0.35 
                     
WEIGHTED AVERAGE NUMBER OF                    
COMMON SHARES OUTSTANDING                    
Basic   7,543,173    7,516,448    7,541,462    7,516,306 
Diluted   7,543,173    7,516,448    7,541,462    7,516,306 

 

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