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 2016 Results
Funded Debt Decreased 34.0% to $23.5 Million
NELSONVILLE, Ohio, July 28, 2016 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2016.
Second Quarter 2016 Sales and Income
Second quarter net sales were $62.6 million compared to $68.6 million in the second quarter of 2015. The Company reported a second quarter net loss of $1.8 million, or $0.23 per diluted share compared to net income of $2.0 million, or $0.26 per diluted share in the second quarter of 2015.
David Sharp, President and Chief Executive Officer, commented, “Much as they did in the first quarter, elevated inventories in the Western, Work, and Hunting channels negatively impacted sales and margins in our wholesale business. Softening of local economies, especially those where oil and gas exploration had been significant, and weak store traffic across retail contributed to our poor performance. The wholesale sales decline was partially offset by a significant gain in our military sales. However, our need to ramp up our internal production capabilities to meet the increase in military footwear demand resulted in additional costs, including labor and training that has temporarily pressured gross margins. While we are disappointed in our recent results, we continue to be confident that the strategic course we’ve set for the company will lead to improved profitability and greater shareholder value over the long-term.”
Second Quarter Review
Net sales for the second quarter were $62.6 million compared to $68.6 million a year ago. Wholesale sales for the second quarter decreased 23% to $41.5 million compared to $53.9 million for the same period in 2015. Retail sales for the second quarter increased 2% to $10.4 million compared to $10.2 million for the same period last year. Military segment sales for the second quarter increased 139% to $10.7 million compared to $4.5 million in the second quarter of 2015.
Gross margin in the second quarter of 2016 was $16.3 million, or 26.0% of sales, compared to $22.6 million, or 33.0% of sales, for the same period last year. The 700 basis point decrease was primarily driven by increased costs related to the ramp up in production capabilities to meet the increased military footwear demand. Also, military segment sales carry lower initial gross margins than our wholesale and retail segments, therefore the increase in military segment sales in the quarter reduced the overall blended margin.
Selling, general and administrative (SG&A) expenses were $18.8 million, or 30.1% of net sales, for the second quarter of 2016 compared to $19.4 million, or 28.3% of net sales, a year ago. The $0.6 million decrease in SG&A expenses was primarily related to lower variable expenses associated with the decrease in wholesale sales.
Loss from operations was $2.5 million compared to income from operations of $3.3 million, or 4.7%, of net sales, a year ago.
Exhibit 99 |
Interest expense was $142,000 for the second quarter of 2016, versus $176,000 for the same period last year.
The Company’s funded debt decreased $12.1 million, or 34.0%, to $23.5 million at June 30, 2016 versus $35.6 million at June 30, 2015.
Inventory at June 30, 2016 was $87.6 million compared with $86.5 million on the same date a year ago. The slight increase in inventories year-over-year was driven by the buildup of raw materials ahead of the ramp up in military footwear production and lower than anticipated wholesale sales in the second quarter. The company is comfortable with the quality of its inventories.
Conference Call Information
The Company’s conference call to review second quarter 2016 results will be broadcast live over the internet today, Thursday, July 28, 2016 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 improved profitability and increased shareholder value (paragraph 3). 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, 2015 (filed March 3, 2016) and quarterly report on Form 10-Q for the period ended March 31, 2016 (filed April 29, 2016). 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.
Exhibit 99 |
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| June 30, 2016 | December 31, 2015 | June 30, 2015 | ||||||||||
| Unaudited | Audited | Unaudited | ||||||||||
| ASSETS: | ||||||||||||
| CURRENT ASSETS: | ||||||||||||
| Cash and cash equivalents | $ | 2,470,576 | $ | 3,407,140 | $ | 4,526,938 | ||||||
| Trade receivables – net | 42,188,601 | 44,549,207 | 58,073,165 | |||||||||
| Other receivables | 587,779 | 583,479 | 605,019 | |||||||||
| Inventories | 87,555,956 | 76,991,059 | 86,478,155 | |||||||||
| Income tax receivable | 2,179,525 | 128,699 | 56,540 | |||||||||
| Deferred income taxes | 1,031,818 | 1,031,818 | 1,291,907 | |||||||||
| Prepaid expenses | 2,886,973 | 2,530,517 | 2,672,643 | |||||||||
| Total current assets | 138,901,228 | 129,221,919 | 153,704,367 | |||||||||
| FIXED ASSETS – net | 27,896,273 | 27,836,527 | 25,258,833 | |||||||||
| IDENTIFIED INTANGIBLES | 36,481,414 | 36,547,873 | 36,615,202 | |||||||||
| OTHER ASSETS | 245,934 | 258,812 | 269,620 | |||||||||
| TOTAL ASSETS | $ | 203,524,849 | $ | 193,865,131 | $ | 215,848,022 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY: | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Accounts payable | $ | 21,892,208 | $ | 9,118,555 | $ | 19,436,481 | ||||||
| Accrued other expenses | 7,380,567 | 5,629,661 | 7,117,467 | |||||||||
| Total current liabilities | 29,272,775 | 14,748,216 | 26,553,948 | |||||||||
| LONG TERM DEBT | 23,503,226 | 23,700,089 | 35,593,360 | |||||||||
| DEFERRED INCOME TAXES | 13,000,609 | 13,000,609 | 12,928,048 | |||||||||
| DEFERRED LIABILITIES | 227,345 | 295,676 | 389,208 | |||||||||
| TOTAL LIABILITIES | 66,003,955 | 51,744,590 | 75,464,564 | |||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||
| Common stock, no par value; | ||||||||||||
| 25,000,000 shares authorized; issued and outstanding June 30, 2016 - 7,481,022; December 31, 2015 - 7,567,271; June 30, 2015 - 7,562,069 | 69,890,665 | 70,882,392 | 70,667,372 | |||||||||
| Retained earnings | 67,630,229 | 71,238,149 | 69,716,086 | |||||||||
| Total shareholders' equity | 137,520,894 | 142,120,541 | 140,383,458 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 203,524,849 | $ | 193,865,131 | $ | 215,848,022 | ||||||
Exhibit 99 |
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| NET SALES | $ | 62,560,094 | $ | 68,583,196 | $ | 120,090,039 | $ | 134,034,499 | ||||||||
| COST OF GOODS SOLD | 46,296,834 | 45,934,563 | 84,915,887 | 89,414,556 | ||||||||||||
| GROSS MARGIN | 16,263,260 | 22,648,633 | 35,174,152 | 44,619,943 | ||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 18,807,595 | 19,395,298 | 37,939,489 | 38,963,245 | ||||||||||||
| INCOME FROM OPERATIONS | (2,544,335 | ) | 3,253,335 | (2,765,337 | ) | 5,656,698 | ||||||||||
| OTHER INCOME AND (EXPENSES): | ||||||||||||||||
| Interest expense | (142,215 | ) | (176,186 | ) | (278,191 | ) | (341,262 | ) | ||||||||
| Other – net | 19,221 | 4,524 | 86,749 | (58,816 | ) | |||||||||||
| Total other - net | (122,994 | ) | (171,662 | ) | (191,442 | ) | (400,078 | ) | ||||||||
| INCOME BEFORE INCOME TAXES | (2,667,329 | ) | 3,081,673 | (2,956,779 | ) | 5,256,620 | ||||||||||
| INCOME TAX EXPENSE | (908,000 | ) | 1,079,000 | (1,006,000 | ) | 1,840,000 | ||||||||||
| NET INCOME | $ | (1,759,329 | ) | $ | 2,002,673 | $ | (1,950,779 | ) | $ | 3,416,620 | ||||||
| INCOME PER SHARE | ||||||||||||||||
| Basic | $ | (0.23 | ) | $ | 0.26 | $ | (0.26 | ) | $ | 0.45 | ||||||
| Diluted | $ | (0.23 | ) | $ | 0.26 | $ | (0.26 | ) | $ | 0.45 | ||||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||||||||||
| Basic | 7,530,579 | 7,561,850 | 7,556,873 | 7,560,603 | ||||||||||||
| Diluted | 7,530,579 | 7,578,713 | 7,556,873 | 7,572,467 | ||||||||||||