Exhibit 99

 

  ROCKY BRANDS, INC.
     
  Company Contact: Mike Brooks
    Chief Executive Officer
    (740) 753-1951
     
  Investor Relations: ICR, Inc.
    Brendon Frey
    (203) 682-8200

 

ROCKY BRANDS, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2016 RESULTS

Fourth Quarter Revenue Increased 2.6% to $67.0 Million

Funded Debt Decreased 38.5% Year-Over-Year to $14.6 Million

 

NELSONVILLE, Ohio, February 16, 2017 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its fourth quarter and year ended December 31, 2016.

 

Fourth Quarter 2016 Sales and Income

Fourth quarter net sales increased 2.6% to $67.0 million versus net sales of $65.3 million in the fourth quarter of 2015. The Company reported a fourth quarter net loss of $0.6 million, or ($0.09) per diluted share, compared to fourth quarter net income of $1.4 million, or $0.18 per diluted share in the year ago period. The fourth quarter of 2016 included a non-cash impairment charge related to the Creative Recreation brand of $3.0 million. Excluding this charge, fourth quarter 2016 net income was $1.3 million, or $0.18 per diluted share. (See below for a reconciliation of fourth quarter 2016 income per diluted share on a GAAP basis to a non-GAAP basis).

 

Fiscal Year 2016 Sales and Income

For fiscal year 2016, net sales decreased 3.4% to $260.3 million versus net sales of $269.3 million in fiscal year 2015. The Company reported a net loss of $2.1 million, or ($0.29) per diluted share, for fiscal year 2016, compared with net income of $6.6 million, or $0.87 per diluted share, for fiscal 2015. Excluding the $1.2 million reorganizational charge the company recorded in the third quarter 2016 and the aforementioned non-cash impairment charge related to the Creative Recreation brand, fiscal 2016 net income was $0.6 million, or $0.08 per diluted share. (See below for a reconciliation of fiscal year 2016 income per diluted share on a GAAP basis to a non-GAAP basis).

 

Mike Brooks, Chief Executive Officer, commented, “The fundamentals of our business continued to improve in the fourth quarter following a difficult start to 2016. While our full year results were disappointing, we’ve taken a number of actions that we believe will improve our earnings power going forward. These include reorganizing our sales teams and reducing headcount in order to lower our expense structure. We also improved the efficiency of our expanded domestic manufacturing facility which allows us to more profitably capitalize on the growing demand for military footwear. In addition, we recently signed a licensing agreement for the Creative Recreation brand in Europe that will help enhance our overall margins. As 2017 gets underway, I’m confident that the changes we’ve made to our operating strategies and leadership team in response to the challenges of the past 12-months have made us a stronger organization and better positions Rocky Brands to return greater value to its shareholders over the long-term.”

 

Fourth Quarter Review

Net sales for the fourth quarter increased 2.6% to $67.0 million compared to $65.3 million a year ago. Wholesale sales for the fourth quarter decreased 8.9% to $42.4 million compared to $46.5 million for the same period in 2015. Retail sales for the fourth quarter were $13.7 million compared to $13.5 million for the same period last year. Military segment sales for the fourth quarter increased 106.4% to $10.9 million compared to $5.3 million in the fourth quarter of 2015.

 

 

 

 

Gross margin in the fourth quarter of 2016 was $21.8 million, or 32.5% of sales, compared to $22.2 million, or 33.9% of sales, for the same period last year. The 140 basis point decrease was driven by the higher percentage of military sales which carry lower gross margins than wholesale and retail.

 

Selling, general and administrative (SG&A) expenses were $19.9 million compared to $20.2 million a year ago. The $0.3 million decrease in SG&A expenses was due primarily to lower compensation and lower advertising expenses, offset primarily by a $1.8 million increase in bad debt expense compared to a year ago. As a percent of sales, SG&A decreased 120 basis points to 29.8% of net sales compared to 31.0% sales last year.

 

Income from operations, excluding the aforementioned non-cash impairment charge, was $1.8 million, or 2.8% of net sales, compared to $1.9 million, or 3.0% of net sales a year ago.

 

Interest expense was $157,000, compared to $167,000 for the fourth quarter of 2015.

 

The Company’s funded debt decreased 38.5% or $9.1 million to $14.6 million at December 31, 2016 versus $23.7 million at December 31, 2015.

 

Inventory decreased 10.2%, or $7.8 million, to $69.2 million at December 31, 2016 compared with $77.0 million on the same date a year ago.

 

Conference Call Information

The Company’s conference call to review fourth quarter and fiscal 2016 results will be broadcast live over the internet today, Thursday, February 16, 2017 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. 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 reports on Form 10-Q for the periods ended March 31, 2016 (filed April 29, 2016), June 30, 2016 (filed July 28, 2016), and September 30, 2016 (filed October 28, 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.

 

 

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets 

 

   December 31, 2016   December 31, 2015 
   Unaudited   Audited 
ASSETS:          
           
CURRENT ASSETS:          
Cash and cash equivalents  $4,480,505   $3,407,140 
Trade receivables – net   40,844,583    44,549,207 
Other receivables   688,251    583,479 
Inventories   69,168,442    76,991,059 
Income tax receivable   1,243,678    128,699 
Deferred income taxes   1,633,353    1,031,818 
Prepaid expenses   2,354,107    2,530,517 
Total current assets   120,412,919    129,221,919 
FIXED ASSETS – net   26,511,493    27,836,527 
IDENTIFIED INTANGIBLES   33,415,694    36,547,873 
OTHER ASSETS   232,509    258,812 
TOTAL ASSETS  $180,572,615   $193,865,131 
           
           
LIABILITIES AND SHAREHOLDERS' EQUITY:          
           
CURRENT LIABILITIES:          
Accounts payable  $11,589,040   $9,118,555 
Accrued expenses:          
Taxes - other   842,325    533,220 
Other   5,288,546    5,096,441 
Total current liabilities   17,719,911    14,748,216 
           
LONG TERM DEBT   14,584,008    23,700,089 
DEFERRED INCOME TAXES   12,999,153    13,000,609 
DEFERRED LIABILITIES   176,219    295,676 
TOTAL LIABILITIES   45,479,291    51,744,590 
           
SHAREHOLDERS' EQUITY:          
Common stock, no par value;          
25,000,000 shares authorized; issued and outstanding  December 31, 2016 - 7,421,455; December 31, 2015 - 7,567,271   69,291,637    70,882,392 
           
Retained earnings   65,801,687    71,238,149 
           
Total shareholders' equity   135,093,324    142,120,541 
           
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  $180,572,615   $193,865,131 

 

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

  

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2016   2015   2016   2015 
   Unaudited   Audited   Unaudited   Audited 
NET SALES  $66,950,298   $65,266,028   $260,258,584   $269,302,023 
                     
COST OF GOODS SOLD   45,160,120    43,111,609    183,528,494    180,410,184 
                     
GROSS MARGIN   21,790,178    22,154,419    76,730,090    88,891,839 
                     
OPERATING EXPENSES                    
Selling, general and administrative expenses   19,946,312    20,221,612    75,631,490    78,402,079 
Reorganizational charge   -    -    1,159,527    - 
Impairment charge   3,000,000    -    3,000,000    - 
Total operating expenses   22,946,312    20,221,612    79,791,017    78,402,079 
                     
INCOME (LOSS) FROM OPERATIONS   (1,156,134)   1,932,807    (3,060,927)   10,489,760 
                     
OTHER INCOME AND (EXPENSES):                    
Interest expense   (157,336)   (167,152)   (616,567)   (696,827)
Other – net   (23,857)   (8,732)   59,020    (105,433)
Total other - net   (181,193)   (175,884)   (557,547)   (802,260)
                     
INCOME (LOSS) BEFORE INCOME TAXES   (1,337,327)   1,756,923    (3,618,474)   9,687,500 
                     
INCOME TAX EXPENSE (BENEFIT)   (703,078)   374,053    (1,479,078)   3,084,343 
                     
NET INCOME (LOSS)  $(634,249)  $1,382,870   $(2,139,396)  $6,603,157 
                     
INCOME PER SHARE                    
Basic  $(0.09)  $0.18   $(0.29)  $0.87 
Diluted  $(0.09)  $0.18   $(0.29)  $0.87 
                     
WEIGHTED AVERAGE NUMBER OF                    
COMMON SHARES OUTSTANDING                    
Basic   7,427,520    7,567,239    7,505,219    7,563,205 
Diluted   7,427,520    7,578,190    7,505,219    7,574,172 

 

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Reconciliation of Income per Diluted Share on a GAAP Basis to a Non-GAAP Basis 

 

   Three Months Ended December 31, 2016 
   (Unaudited) 
   GAAP Basis   Reorganizational
Charge
   Impairment
Charge
   Non GAAP
Basis
 
NET SALES  $66,950,298   $-   $-   $66,950,298 
                     
COST OF GOODS SOLD   45,160,120    -    -    45,160,120 
                     
GROSS MARGIN   21,790,178    -    -    21,790,178 
                     
OPERATING EXPENSES                    
Selling, general and administrative expenses   19,946,312    -    -    19,946,312 
Reorganizational charge   -    -    -      
Impairment charge   3,000,000    -    3,000,000    - 
Total operating expenses   22,946,312    -    3,000,000    19,946,312 
                     
INCOME (LOSS) FROM OPERATIONS   (1,156,134)   -    (3,000,000)   1,843,866 
                     
OTHER INCOME AND (EXPENSES):                    
Interest expense   (157,336)   -    -    (157,336)
Other – net   (23,857)   -    -    (23,857)
Total other - net   (181,193)   -    -    (181,193)
                     
INCOME (LOSS) BEFORE INCOME TAXES   (1,337,327)   -    (3,000,000)   1,662,673 
                     
INCOME TAX (BENEFIT) EXPENSE   (703,078)   -    (1,050,000)   346,922 
                     
NET INCOME (LOSS)  $(634,249)  $-   $(1,950,000)  $1,315,751 
                     
INCOME PER DILUTED SHARE  $(0.09)  $-   $(0.26)  $0.18 
                     
WEIGHTED AVERAGE NUMBER OF                    
COMMON SHARES OUTSTANDING                    
Basic   7,427,520    7,427,520    7,427,520    7,427,520 
Diluted   7,427,520    7,427,520    7,437,888    7,437,888 

 

 

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Reconciliation of Income per Diluted Share on a GAAP Basis to a Non-GAAP Basis

 

   Twelve Months Ended December 31, 2016  
   (Unaudited)  
   GAAP Basis   Reorganizational
Charge
   Impairment
Charge
   Non GAAP
Basis
 
NET SALES  $260,258,584   $-   $-   $260,258,584 
                     
COST OF GOODS SOLD   183,528,494    -    -    183,528,494 
                     
GROSS MARGIN   76,730,090    -    -    76,730,090 
                     
OPERATING EXPENSES                    
Selling, general and administrative expenses   75,631,490    -    -    75,631,490 
Reorganizational charge   1,159,527    1,159,527    -    - 
Impairment charge   3,000,000    -    3,000,000    - 
Total operating expenses   79,791,017    1,159,527    3,000,000    75,631,490 
                     
INCOME (LOSS) FROM OPERATIONS   (3,060,927)   (1,159,527)   (3,000,000)   1,098,600 
                     
OTHER INCOME AND (EXPENSES):                    
Interest expense   (616,567)   -    -    (616,567)
Other – net   59,020    -    -    59,020 
Total other - net   (557,547)   -    -    (557,547)
                     
INCOME (LOSS) BEFORE INCOME TAXES   (3,618,474)   (1,159,527)   (3,000,000)   541,053 
                     
INCOME TAX (BENEFIT) EXPENSE   (1,479,078)   (405,834)   (1,050,000)   (23,244)
                     
NET INCOME (LOSS)  $(2,139,396)  $(753,693)  $(1,950,000)  $564,297 
                     
INCOME PER DILUTED SHARE  $(0.29)  $(0.10)  $(0.26)  $0.08 
                     
WEIGHTED AVERAGE NUMBER OF                    
COMMON SHARES OUTSTANDING                    
Basic   7,505,219    7,505,219    7,505,219    7,505,219 
Diluted   7,505,219    7,519,414    7,519,414    7,519,414 

 

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