RCKY
$19.80
Rocky Brands
$.65
3.39%
Earnings Details
3rd Quarter September 2017
Tuesday, October 24, 2017 4:05:02 PM
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Summary

Rocky Brands (RCKY) Recent Earnings

Rocky Brands (RCKY) reported 3rd Quarter September 2017 earnings of $0.39 per share on revenue of $64.7 million. The consensus earnings estimate was $0.29 per share on revenue of $64.5 million. Revenue fell 11.7% compared to the same quarter a year ago.

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
$0.39
Earnings Whisper
-
Consensus Estimate
$0.29
Reported Revenue
$64.7 Mil
Revenue Estimate
$64.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rocky Brands, Inc. Announces Third Quarter 2017 Results

Adjusted Earnings Per Share Increased to $0.39

--Funded Debt Decreased 62.5% to $11.6 Million

Rocky Brands, Inc. (RCKY) today announced financial results for the three and nine month periods ended September 30, 2017.

Sales & Income Review

Third quarter net sales were $64.7 million compared to $73.2 million in the third quarter of 2016. The Company reported third quarter net income of $2.2 million, or $0.30 per diluted share compared to net income of $0.4 million, or $0.06 per diluted share in the third quarter of 2016. Adjusted net income for the third quarter of 2017 was $2.8 million, or $0.39 per diluted share compared to adjusted net income of $1.2 million, or $0.16 per diluted share in the prior year period.

Net sales for the first nine months of 2017 were $186.2 million compared to $193.3 million for the first nine months of 2016. The Company reported net income of $5.2 million, or $0.70 per diluted share compared to a net loss of $1.5 million, or ($0.20) per diluted share for the nine months ended September 30, 2017 and 2016, respectively. Adjusted net income for the first nine months of 2017 was $5.8 million, or $0.79 per diluted share compared to an adjusted net loss of $0.8 million, or ($0.10) per diluted share in the prior year period.

Jason Brooks, President and Chief Executive Officer, commented, "We are pleased to have achieved another quarter of strong earnings growth. Our ability to drive enhanced profitability despite softer top-line trends highlights our improved operating structure and focus on increasing margins. As we previously announced, approximately $1.7 million of military footwear shipments shifted from the third quarter to the fourth quarter due to the temporary shutdown of our Puerto Rico facility in the wake of Hurricane Maria. On top of this, wholesale sales were below expectations as each of our brands posted modest shortfalls versus plan. We believe this was due to a combination of factors including lower discounting as we’ve placed a greater emphasis on full-price selling and retailers buying closer to the holiday season compared with previous years. We were able to offset a portion of these challenges through the expansion of our direct channel as we continue to sign new accounts to our Lehigh Outfitters CustomFit program. Looking ahead, we are cautiously optimistic about our growth prospects beginning in the fourth quarter as wholesale sales trends have recently accelerated and our military manufacturing has resumed normal operations. We remain confident that our current strategies have the Company well positioned to deliver increased value to shareholders over the long-term."

Third Quarter Review

Net sales for the third quarter decreased 11.7% to $64.7 million compared to $73.2 million a year ago. Wholesale sales for the third quarter decreased 12.9% to $46.0 million compared to $52.9 million for the same period in 2016. Retail sales for the third quarter increased 7.8% to $11.1 million compared to $10.3 million for the same period last year. Military segment sales for the third quarter were $7.6 million compared to $10.1 million in the third quarter of 2016.

Gross margin in the third quarter of 2017 was $19.5 million, or 30.2% of sales, compared to $19.8 million, or 27.0% of sales, for the same period last year. The 320 basis point increase was driven by a significant improvement in both wholesale segment and military segment margins. Third quarter 2017 gross margin includes approximately $1 million of additional expenses related to payroll and overhead costs that could not be capitalized in inventory due to lower than usual production volumes at the Company’s Puerto Rico manufacturing facility because of the disruption from Hurricanes Maria and Irma. Excluding the additional expenses, adjusted gross margin was 31.7%.

Selling, general and administrative (SG&A) expenses decreased to $16.0 million, or 24.8% of net sales, for the third quarter of 2017 compared to $18.9 million, or 25.8% of net sales, a year ago. Third quarter 2016 SG&A expenses included an approximately $1.2 million charge related to reorganizational activities. Excluding the charge, the $1.7 million decrease in SG&A expenses was primarily related to lower compensation expense following the workforce reductions in the second half of 2016.

Income from operations for the quarter was $3.5 million, or 5.4% of net sales compared to income from operations of $0.9 million, or 1.2% of net sales a year ago.

Interest expense was $110,000 for the third quarter of 2017, versus $181,000 for the same period last year.

During the third quarter 2017, the company repurchased 48,616 shares of its common stock at an average price of $13.35.

The Company’s funded debt decreased $19.3 million, or 62.5% to $11.6 million at September 30, 2017 versus $31.0 million at September 30, 2016.

Inventory at September 30, 2017 decreased 3.8% to $76.9 million compared to $79.9 million on the same date a year ago.

Use of Non-GAAP Financial Measures

In addition to GAAP financial measures, we present the following non-GAAP financial measures: "non-GAAP adjusted gross margin," "non-GAAP adjusted selling, general, and administrative expenses," "non-GAAP adjusted net income," and "non-GAAP adjusted net income per share." Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented. We believe 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. We believe they also provide a useful baseline for analyzing trends in our 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 2017 results will be broadcast live over the internet today, Tuesday, October 24, 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(R), Georgia Boot(R), Durango(R), Lehigh(R), Creative Recreation(R), and the licensed brand Michelin(R).

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 growth prospects and delivery of increased value to shareholders (paragraph 4). 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, 2016 (filed March 9, 2017) and quarterly report on Form 10-Q for the quarters ended March 31, 2017 (filed May 5, 2017) and June 30, 2017 (filed August 9, 2017). 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
September 30, 2017
December 31, 2016
September 30, 2016
Unaudited
Audited
Unaudited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
$
2,238,862
$
4,480,505
$
3,942,209
Trade receivables - net
45,106,205
40,844,583
51,292,323
Other receivables
800,322
688,251
579,976
Inventories
76,885,153
69,168,442
79,922,305
Income tax receivable
-
1,243,678
1,190,702
Prepaid expenses
2,431,996
2,354,107
2,644,102
127,462,538
118,779,566
139,571,617
Total current assets
FIXED ASSETS - net
24,742,833
26,511,493
27,450,150
IDENTIFIED INTANGIBLES
33,319,334
33,415,694
36,448,490
OTHER ASSETS
225,310
232,509
238,251
TOTAL ASSETS
$ 185,750,015
$ 178,939,262
$
203,708,508
LIABILITIES AND SHAREHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Accounts payable
$
16,861,274
$
11,589,040
$
15,042,805
Accrued other expenses:
9,097,184
6,130,871
8,604,611
25,958,458
17,719,911
23,647,416
Total current liabilities
LONG TERM DEBT
11,630,000
14,584,008
30,972,398
DEFERRED INCOME TAXES
10,464,435
11,365,800
12,120,693
DEFERRED LIABILITIES
181,737
176,219
208,387
TOTAL LIABILITIES
48,234,630
43,845,938
66,948,894
SHAREHOLDERS’ EQUITY:
Common stock, no par value;
68,979,376
69,291,637
69,507,320
25,000,000 shares authorized; issued and outstanding
September
30, 2017 - 7,403,195; December 31, 2016 -
7,421,455;
September 30, 2016 - 7,447,331
Retained earnings
68,536,009
65,801,687
67,252,294
137,515,385
135,093,324
136,759,614
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 185,750,015
$ 178,939,262
$
203,708,508
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Unaudited
Unaudited
Unaudited
Unaudited
NET SALES
$ 64,675,082
$ 73,218,247
$ 186,202,989
$ 193,308,286
COST OF GOODS SOLD
45,163,539
53,452,487
128,779,845
138,368,374
GROSS MARGIN
19,511,543
19,765,760
57,423,144
54,939,912
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
16,026,654
17,745,691
49,313,498
55,685,180
REORGANIZATIONAL CHARGE
-
1,159,527
-
1,159,527
TOTAL OPERATING EXPENSE
16,026,654
18,905,218
49,313,498
56,844,707
INCOME (LOSS) FROM OPERATIONS
3,484,889
860,542
8,109,646
(1,904,795 )
OTHER INCOME AND (EXPENSES):
Interest expense
(110,335 )
(181,040 )
(280,824 )
(459,231 )
Other - net
12,208
(3,873 )
35,064
82,876
Total other - net
(98,127 )
(184,913 )
(245,760 )
(376,355 )
INCOME (LOSS) BEFORE INCOME TAXES
3,386,762
675,629
7,863,886
(2,281,150 )
INCOME TAX EXPENSE (BENEFIT)
1,152,000
230,000
2,674,000
(776,000 )
NET INCOME (LOSS)
$
2,234,762
$
445,629
$
5,189,886
$
(1,505,150 )
INCOME (LOSS) PER SHARE
Basic
$
0.30
$
0.06
$
0.70
$
(0.20 )
Diluted
$
0.30
$
0.06
$
0.70
$
(0.20 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic
7,357,000
7,480,733
7,411,000
7,531,308
Diluted
7,362,088
7,504,521
7,414,317
7,531,308
Rocky Brands, Inc. and Subsidiaries
Reconciliation of Gross Margin, Selling General Admin, Net Income
(Loss)
Three months ended
Nine months ended
September 30,
September 30,
2017
2016
2017
2016
Gross Margin
Gross margin, as reported
$ 19,511,543
$ 19,765,760
$ 57,423,144
$ 54,939,912
Add: hurricane related expenses
963,570
-
963,570
-
Adjusted gross margin
$ 20,475,113
$ 19,765,760
$ 58,386,714
$ 54,939,912
Operating Expenses
Sales, general, and administrative, as reported
$ 16,026,654
$ 18,905,218
$ 49,313,498
$ 56,844,707
Less: reorganizational charge
-
1,159,527
-
1,159,527
Adjusted selling, general, and administrative expenses
$ 16,026,654
$ 17,745,691
$ 49,313,498
$ 55,685,180
Net Income (Loss)
Net income (loss), as reported
$
2,234,762
$
445,629
$
5,189,886
$ (1,505,150 )
Add: hurricane related expenses, after tax
635,956
-
635,956
-
Add: reorganizational charge, after tax
-
753,693
-
753,693
Adjusted net income (loss)
$
2,870,718
$
1,199,322
$
5,825,842
$
(751,457 )
Net income (loss) per share, as reported
Basic
$
0.30
$
0.06
$
0.70
$
(0.20 )
Diluted
$
0.30
$
0.06
$
0.70
$
(0.20 )
Adjusted net income (loss) per share
Basic
$
0.39
$
0.16
$
0.79
$
(0.10 )
Diluted
$
0.39
$
0.16
$
0.79
$
(0.10 )
Weighted average shares outstanding
Basic
7,357,000
7,480,733
7,411,000
7,531,308
Diluted
7,362,088
7,504,521
7,414,317
7,531,308

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SOURCE: Rocky Brands, Inc.

Rocky Brands, Inc.
Tom Robertson, 740-753-1951
Chief Financial Officer
or
Investor Relations:
ICR, Inc.
Brendon Frey, 203-682-8200