RCKY
$28.64
Rocky Brands
($.77)
(2.62%)
Earnings Details
3rd Quarter September 2019
Wednesday, October 23, 2019 4:05:00 PM
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Summary

Rocky Brands (RCKY) Recent Earnings

Rocky Brands (RCKY) reported 3rd Quarter September 2019 earnings of $0.68 per share on revenue of $67.2 million. The consensus earnings estimate was $0.63 per share on revenue of $68.2 million. Revenue grew 1.9% on a year-over-year basis.

Rocky Brands Inc is a designer, manufacturer and marketer of footwear and apparel marketed under a portfolio of brand names including Rocky, Georgia Boot, Durango, Lehigh, Creative Recreation and the licensed brand Michelin.

Results
Reported Earnings
$0.68
Earnings Whisper
-
Consensus Estimate
$0.63
Reported Revenue
$67.2 Mil
Revenue Estimate
$68.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rocky Brands, Inc. Announces 2019 Third Quarter Results

Retail Sales Increased 21.8% to $14.5 Million

Net Income Per Share Increased 11.9% to $0.75

Adjusted Net Income Per Share Increased 13.3% to $0.68

NELSONVILLE, Ohio--(BUSINESS WIRE)--Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its third quarter ended September 30, 2019.

Third Quarter 2019 and Year-to-Date Sales and Income

Third quarter net sales increased 2.0% to $67.2 million compared to $65.9 million in the third quarter of 2018. The Company reported third quarter net income of $5.6 million, or $0.75 per diluted share compared to net income of $5.0 million, or $0.67 per diluted share in the third quarter of 2018. Adjusted net income for the third quarter of 2019 was $5.0 million, or $0.68 per diluted share compared to adjusted net income of $4.5 million, or $0.60 per diluted share in the prior year period.

Net sales for the first nine months of 2019 increased 5.2% to $195.1 million compared with $185.5 million for the first nine months of 2018. The Company reported net income of $12.4 million, or $1.66 per diluted share and net income of $10.9 million, or $1.47 per diluted share for the nine months ended September 30, 2019 and 2018, respectively. Adjusted net income for the first nine months of 2019 was $11.8 million, or $1.59 per diluted share compared to adjusted net income of $10.4 million, or $1.40 per diluted share for the same period of 2018.

Jason Brooks, President and Chief Executive Officer, commented, “We continue to have success capitalizing on the key growth opportunities we have identified for our Company. Our retail division is benefitting from the investments we have made in people as well as systems & processes which are driving strong sales increases across both our Lehigh CustomFit model and ecommerce channels. At the same time, the focus we have placed on product innovation, enhanced consumer engagement, and stronger retail partnerships is fueling consistent gains for our wholesale business led most recently by our western, outdoor and commercial military categories. Importantly, we’ve been able to translate our top-line results into even stronger bottom line performances through gross margin expansion and our commitment to operational excellence. While we now face some near-term headwinds due to the tariff increase on footwear imports from China that went into effect in September, we believe the strength of our brand portfolio, margin enhancing growth prospects and internal manufacturing capabilities have us well positioned to deliver increased profitability over the long-term.”

Third Quarter and Year-to-Date Review

Net sales for the third quarter increased 2.0% to $67.2 million compared to $65.9 million a year ago. Wholesale sales for the third quarter increased 0.4% to $47.2 million compared to $47.0 million for the same period in 2018. Retail sales for the third quarter increased 21.8% to $14.5 million compared to $11.9 million for the same period last year. Military segment sales for the third quarter decreased, as expected, to $5.4 million compared to $7.0 in the third quarter of 2018.

Gross margin in the third quarter of 2019 increased to $25.0 million, or 37.2% of sales, compared to $22.4 million, or 34.0% of sales, for the same period last year. The 320 basis point increase was driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales combined with higher retail, wholesale and military margins. Third quarter 2019 gross margins also benefitted from a hurricane related expense reimbursement, which contributed approximately 100 basis points to the year-over-year improvement. Excluding the hurricane related expense reimbursement, gross margin in the third quarter of 2019 was $24.3 million, or 36.2% of sales.

Operating expenses were $18.0 million, or 26.8% of net sales, for the third quarter of 2019 compared to $16.8 million, or 25.5% of net sales, a year ago. The increase in operating expenses was primarily attributable to higher variable expenses associated with the growth in retail sales.

Income from operations for the third quarter of 2019 was $7.0 million, or 10.4% of net sales compared to $5.6 million for the same period a year ago, or 8.5% of net sales.

For the first nine months of 2019, wholesale sales increased 2.4% to $130.3 million compared to $127.2 million for the same period in 2018. Retail sales for the first nine months increased 19.9% to $44.0 million compared to $36.7 million for the same period last year. Military segment sales for the first nine months decreased, as expected, to $20.8 million compared to $21.6 million in the first nine months of 2018.

Gross margin in the first nine months of 2019 increased 10.3% to $69.4 million, or 35.6% of sales, compared to $62.9 million, or 33.9% of sales, for the same period last year. Excluding the hurricane related expense reimbursement gross margin for the first nine months of 2019 was $68.7 million, or 35.2% of sales.

Operating expenses were $54.0 million, or 27.7% of net sales, for the first nine months of 2019 compared to $49.7 million, or 26.8% of net sales, a year ago.

Income from operations for the first nine months of 2019 increased 16.7% to $15.4 million, or 7.9% of net sales compared to $13.2 million for the same period a year ago, or 7.1% of net sales.

Balance Sheet Review

Cash and cash equivalents increased $2.2 million or 52.4% to $6.4 million at September 30, 2019 compared to $4.2 million on the same date a year ago.

Inventory at September 30, 2019 increased 5.7% to $82.9 million compared to $78.4 million on the same date a year ago.

Use of Non-GAAP Financial Measures

In addition to GAAP financial measures, the Company presents the following non-GAAP financial measures: “adjusted net income,” “adjusted net income per share” and “adjusted gross margin.” Adjusted results exclude the impact of items that management of the Company believes affect the comparability or underlying business trends in its consolidated financial statements in the periods presented. The Company believes that these non-GAAP measures are useful to investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. The Company believes they also provide a useful baseline for analyzing trends in its operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See “Reconciliation of GAAP Measures to Non-GAAP Measures” accompanying this press release.

Conference Call Information

The Company’s conference call to review third quarter 2019 results will be broadcast live over the internet today, Wednesday, October 23, 2019 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 705-6003 (domestic) or (201) 493-6725 (international). The conference call will also be available to interested parties through a live webcast at www.rockybrands.com. Please visit the website and select the “Investors” link at least 15 minutes prior to the start of the call to register and download any necessary software.

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 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 headwinds due to tariffs on footwear imports from China (paragraph 3) the Company’s positioning to deliver expected increased profitability over the long-term based on the Company’s belief in the strength of its brand portfolio, margin enhancing growth prospects and internal manufacturing capabilities (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, 2018 (filed March 13, 2019) and quarterly reports on Form 10-Q for the quarters ended March 31, 2019 (filed May 9, 2019) and June 30, 2019 (filed August 8, 2019). 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

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

 

 

2019

 

2018

 

2018

ASSETS:

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

6,440

$

10,173

$

4,210

Trade receivables, net

 

50,700

 

43,337

 

50,691

Contract receivables

 

2,036

 

2,602

 

4,849

Other receivables

 

310

 

331

 

282

Inventories – net

 

82,881

 

72,822

 

78,409

Income tax receivable

 

-

 

30

 

-

Prepaid expenses

 

2,656

 

1,890

 

2,122

Total current assets

 

145,023

 

131,185

 

140,563

LEASED ASSETS

 

1,781

 

-

 

-

PROPERTY, PLANT & EQUIPMENT – net

 

25,150

 

23,057

 

23,209

IDENTIFIED INTANGIBLES – net

 

30,248

 

30,273

 

30,283

OTHER ASSETS

 

293

 

148

 

163

TOTAL ASSETS

$

202,495

$

184,663

$

194,218

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

$

20,531

$

13,543

$

20,622

Contract liabilities

 

1,936

 

2,602

 

4,849

Accrued expenses:

 

 

 

 

 

 

Salaries and wages

 

2,791

 

3,339

 

3,661

Taxes - other

 

624

 

556

 

158

Accrued freight

 

495

 

668

 

465

Commissions

 

488

 

560

 

432

Accrued duty

 

2,597

 

2,334

 

2,727

Income tax payable

 

19

 

-

 

1,888

Other

 

1,766

 

1,416

 

1,308

Total current liabilities

 

31,247

 

25,018

 

36,110

LONG-TERM TAXES PAYABLE

 

169

 

169

 

169

LONG-TERM LEASE

 

1,188

 

-

 

-

DEFERRED INCOME TAXES

 

7,780

 

7,780

 

7,726

DEFERRED LIABILITIES

 

230

 

121

 

152

TOTAL LIABILITIES

 

40,614

 

33,088

 

44,158

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Common stock, no par value;

 

 

 

 

 

 

25,000,000 shares authorized; issued and
outstanding September 30, 2019 - 7,403,219;
December 31, 2018 - 7,368,494 and September 30, 2018 - 7,421,317

 

69,273

 

68,387

 

69,589

Retained earnings

 

92,608

 

83,188

 

80,471

Total shareholders' equity

 

161,881

 

151,575

 

150,060

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

202,495

$

184,663

$

194,218

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

NET SALES

$

67,179

$

65,916

$

195,067

$

185,508

COST OF GOODS SOLD

 

42,165

 

43,516

 

125,633

 

122,610

GROSS MARGIN

 

25,014

 

22,400

 

69,434

 

62,898

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

18,027

 

16,791

 

54,004

 

49,688

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

6,987

 

5,609

 

15,430

 

13,210

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

43

 

31

 

160

 

(148)

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

7,030

 

5,640

 

15,590

 

13,062

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

 

1,414

 

595

 

3,212

 

2,117

 

 

 

 

 

 

 

 

 

NET INCOME

$

5,616

$

5,045

$

12,378

$

10,945

 

 

 

 

 

 

 

 

 

INCOME PER SHARE

 

 

 

 

 

 

 

 

Basic

$

0.76

$

0.68

$

1.67

$

1.48

Diluted

$

0.75

$

0.67

$

1.66

$

1.47

WEIGHTED AVERAGE NUMBER OF

 

 

 

 

 

 

 

 

COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

7,400

 

7,418

 

7,392

 

7,412

Diluted

 

7,455

 

7,480

 

7,443

 

7,454

Rocky Brands, Inc. and Subsidiaries

Reconciliation of GAAP Measures to Non-GAAP Measures

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Gross Margin

 

 

 

 

 

 

 

 

Gross margin, as reported

$

25,014

$

22,400

$

69,434

$

62,898

Less: Hurricane related expense reimbursement *

 

(725)

 

-

 

(725)

 

-

Adjusted gross margin

$

24,289

$

22,400

$

68,709

$

62,898

 

 

 

 

 

 

 

 

 

Operating Expenses

$

18,027

$

16,791

$

54,004

$

49,688

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS, ADJUSTED

$

6,262

$

5,609

$

14,705

$

13,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

Net income, as reported

$

5,616

$

5,045

$

12,378

$

10,945

Less: Transition Tax Adjustment **

 

-

 

(561)

 

-

 

(561)

Less: Hurricane related expense reimbursement, after tax

 

(579)

 

-

 

(579)

 

-

Adjusted net income

$

5,037

$

4,484

$

11,799

$

10,384

 

 

 

 

 

 

 

 

 

Net income per share, as reported

 

 

 

 

 

 

 

 

Basic

$

0.76

$

0.68

$

1.67

$

1.48

Diluted

$

0.75

$

0.67

$

1.66

$

1.47

 

 

 

 

 

 

 

 

 

Adjusted net income per share

 

 

 

 

 

 

 

 

Basic

$

0.68

$

0.60

$

1.60

$

1.40

Diluted

$

0.68

$

0.60

$

1.59

$

1.40

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

7,400

 

7,418

 

7,392

 

7,412

Diluted

 

7,455

 

7,480

 

7,443

 

7,454

* Adjustment related to reimbursements of expenses associated with the temporary closure of our Puerto Rican manufacturing facility as a result of Hurricane Maria in 2017
** Adjustment related to the one-time transition tax on the deemed repatriation of undistributed foreign earnings as a result of further analysis of the provisions of the Tax Cuts and Jobs Act.

 

Company:
Tom Robertson
Chief Financial Officer
(740) 753-9100

Investor Relations:
Brendon Frey
ICR, Inc.
(203) 682-8200

Source: Rocky Brands, Inc.