Rocky Brands, Inc. Announces First Quarter 2012 Results

Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its first quarter ended March 31, 2012.

First quarter 2012 net income increased $0.2 million to $0.7 million compared with $0.5 million in the first quarter of 2011 and diluted earnings per share increased 42.9% to $0.10 from $0.07 during the same period last year. First quarter net sales improved to $53.3 million versus net sales of $52.3 million a year ago.

David Sharp, President and Chief Executive Officer, commented, “We are pleased with our first quarter results as we continued to realize solid progress against our strategic initiatives. Our top-line performance was again driven by our wholesale division highlighted by gains in our work and western segments and the expansion of our fast growing commercial military business. New product introductions continue to fuel growth and are leading to additional distribution with both new and existing accounts. Sell-in during the first quarter included a rollout to all locations of one of our largest national accounts that included price concessions which had a temporary impact on gross margins. We were able to fully offset the decline through expense management and deliver a marked improvement in earnings compared to a year ago. This was especially true in our retail division where the profit contribution was up dramatically even on lower sales. We are encouraged by the current pace of our business and based on our fall order book we expect our sales momentum to carry through the remainder of the year.”

First Quarter Review

Wholesale sales for the first quarter increased 6.5% to $42.4 million compared to $39.8 million for the same period in 2011. Retail sales for the first quarter were $10.5 million compared to $11.7 million for the same period last year. Military segment sales for the first quarter were $0.4 million compared to $0.8 million in the same period in 2011. As a result, net sales for the first quarter increased 1.9% to $53.3 million compared to $52.3 million a year ago.

Gross margin in the first quarter of 2012 was $18.0 million, or 33.8% of sales compared to $19.3 million, or 36.8% for the same period last year. The decrease in gross margin was primarily driven by lower initial mark ups associated with the rollout to all locations of one of our largest national accounts.

Selling, general and administrative (SG&A) expenses decreased 8.2% to $16.7 million or 31.4% of net sales, for the first quarter of 2012 compared to $18.2 million, or 34.9% of net sales a year ago. The $1.5 million decrease is primarily due to lower compensation expense and operating costs of our retail business.

Income from operations was $1.3 million, or 2.4% of net sales, compared to $1.0 million, or 2.0% of net sales, in the prior year period.

Interest expense decreased to $0.1 million for the first quarter of 2012 versus $0.2 million due to lower borrowings versus the same period a year ago.

The Company’s funded debt decreased 22.5% or $6.3 million to $21.5 million at March 31, 2012 versus $27.8 million at March 31, 2011.

Inventory increased 4.0% to $64.1 million at March 31, 2012 compared with $61.7 million on the same date a year ago. The increase in inventory was the result of an increase in cost per unit partially offset by a decrease in units of footwear.

Conference Call Information

The Company’s conference call to review first quarter fiscal 2012 results will be broadcast live over the internet today, Thursday, April 19, 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 future sales (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, 2011 (filed February 28, 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
 
March 31, 2012 December 31, 2011 March 31, 2011
Unaudited Audited Unaudited
ASSETS:
 
CURRENT ASSETS:
Cash and cash equivalents $ 2,424,864 $ 3,650,291 $ 2,230,661
Trade receivables – net 38,587,112 45,008,793 37,459,868
Other receivables 783,349 946,686 1,010,981
Inventories 64,113,346 65,019,048 61,654,840
Income tax receivable 947,575 1,164,664 260,555
Deferred income taxes 1,154,040 1,154,040 1,218,101
Prepaid expenses   2,842,105   2,561,941   3,033,002  
Total current assets 110,852,391 119,505,463 106,868,008
FIXED ASSETS – net 24,572,535 23,557,102 22,631,554
IDENTIFIED INTANGIBLES 30,498,545 30,493,107 30,512,025
OTHER ASSETS   468,692   510,293   1,548,308  
TOTAL ASSETS $ 166,392,163 $ 174,065,965 $ 161,559,895  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
CURRENT LIABILITIES:
Accounts payable $ 12,643,640 $ 5,696,363 $ 10,368,817
Current maturities – long term debt - - 463,749
Accrued expenses:
Taxes - other 481,847 609,992 554,680
Other   2,775,396   4,624,167   4,467,278  
Total current liabilities 15,900,883 10,930,522 15,854,524
LONG TERM DEBT – less current maturities 21,512,650 35,000,000 27,300,087
DEFERRED INCOME TAXES 10,987,395 10,987,395 9,374,685
DEFERRED LIABILITIES   488,437   488,437   2,917,934  
 
TOTAL LIABILITIES 48,889,365 57,406,354 55,447,230
 
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding March 31, 2012 - 7,503,568; December 31, 2011 - 7,489,995; March 31, 2011 - 7,489,995

69,694,770

69,572,270

69,546,028
 
Accumulated other comprehensive loss - - (2,755,425 )
Retained earnings   47,808,028   47,087,341   39,322,062  
 
Total shareholders' equity   117,502,798   116,659,611   106,112,665  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 166,392,163 $ 174,065,965 $ 161,559,895  

           

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations
 
Three Months Ended
March 31,
2012 2011
Unaudited Unaudited
 
NET SALES $ 53,325,918 $ 52,306,275
 
COST OF GOODS SOLD   35,303,837     33,040,330  
 
GROSS MARGIN 18,022,081 19,265,945
 
OPERATING EXPENSES
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES   16,742,058     18,229,351  
 
INCOME FROM OPERATIONS 1,280,023 1,036,594
 
OTHER INCOME AND (EXPENSES):
Interest expense (144,347 ) (215,532 )
Other – net   (8,989 )   12,554  
Total other - net (153,336 ) (202,978 )
 
INCOME BEFORE INCOME TAXES 1,126,687 833,616
 
INCOME TAX EXPENSE   406,000     292,000  
 
NET INCOME $ 720,687   $ 541,616  
 
INCOME PER SHARE
Basic $ 0.10 $ 0.07
Diluted $ 0.10 $ 0.07
 
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic   7,503,270     7,476,448  
Diluted   7,503,270     7,478,611  

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