RCKY
$25.26
Rocky Brands
($.08)
(.32%)
Earnings Details
2nd Quarter June 2020
Tuesday, July 28, 2020 4:05:00 PM
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Summary

Rocky Brands (RCKY) Recent Earnings

Rocky Brands (RCKY) reported 2nd Quarter June 2020 earnings of $0.44 per share on revenue of $56.2 million. The consensus estimate was a loss of $0.16 per share on revenue of $42.1 million. Revenue fell 9.3% 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
$0.44
Earnings Whisper
-
Consensus Estimate
($0.16)
Reported Revenue
$56.2 Mil
Revenue Estimate
$42.1 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Rocky Brands, Inc. Announces 2020 Second Quarter Results

Second Quarter Diluted Earnings Per Share of $0.33

Retail Sales Increased 15.8% to $16.3 Million

Cash Flow from Operations Increased by $4.7 Million

Company had Cash and Cash Equivalents of $25.8 Million and Zero Debt at June 30, 2020

NELSONVILLE, Ohio--(BUSINESS WIRE)--Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2020.

Second Quarter 2020 and Year-to-Date Sales and Income

Second quarter net sales were $56.2 million compared to $62.0 million in the second quarter of 2019. The Company reported second quarter net income of $2.4 million, or $0.33 per diluted share compared to net income of $3.2 million, or $0.42 per diluted share in the second quarter of 2019. Adjusted net income for the second quarter of 2020, which excludes expenses related to the temporary closure of the Company’s manufacturing facilities due to COVID-19, was $3.2 million, or $0.44 per diluted share.

Net sales for the first six months of 2020 were $111.9 million compared with $127.9 million for the first six months of 2019. The Company reported net income of $3.6 million, or $0.49 per diluted share, and net income of $6.8 million, or $0.91 per diluted share for the six months ended June 30, 2020 and 2019, respectively. Adjusted net income for the first six months of 2020, which excludes expenses related to the temporary closure of the Company’s manufacturing facilities due to COVID-19, was $5.2 million, or $0.71 per diluted share.

Jason Brooks, President and Chief Executive Officer, commented, “Our business exhibited increasing strength as the quarter progressed despite the ongoing challenges created by COVID-19. The work we’ve done over the past several years strengthening our brands and product lines, enhancing our marketing programs and building out our digital capabilities has allowed us to capitalize on the accelerated shift in consumer spending online brought on by the pandemic. Between our branded websites and online marketplaces, total digital sales increased triple digits on a percentage basis in the second quarter driven by existing customers and a dramatic increase in new customer acquisition. Meanwhile, the strong relationships we have forged with our key wholesale accounts helped us weather the slowdown at brick and mortar retail from reduced traffic and store closures. As lockdown restrictions began to ease in many areas of the country midway through the second quarter, we experienced a significant pick up in weekly sell-through at retail. Given the circumstances, we are pleased with our recent performance and encouraged as this momentum has carried into July. While there is still uncertainty about the ultimate impact that COVID-19 will have on our industry and the overall economy, I am confident that our business model and balance sheet, which featured over $25 million in cash and cash equivalents and no debt at the end of the second quarter, have Rocky Brands well positioned to navigate the current headwinds and emerge from the pandemic poised for long-term success.”

Second Quarter Review

Net sales for the second quarter declined 9.3% to $56.2 million compared to $62.0 million a year ago. Wholesale sales for the second quarter declined 15.6% to $34.3 million compared to $40.6 million for the same period in 2019. Retail sales for the second quarter increased 15.8% to $16.3 million compared to $14.1 million for the same period last year. Military segment sales for the second quarter were $5.6 million compared to $7.2 million in the second quarter of 2019.

Gross margin in the second quarter of 2020 was $19.5 million, or 34.6% of sales, compared to $21.4 million, or 34.6% of sales, for the same period last year. Adjusted gross margin for the second quarter of 2020, which excludes approximately $1.0 million in expenses related to the temporary closure of the Company’s manufacturing facilities due to COVID-19, was $20.4 million, or 36.4% of sales. The 180 basis point increase was driven primarily by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales, and higher retail margins year over year, partially offset by lower wholesale and military margins compared to 2019.

Operating expenses were $16.4 million, or 29.1% of net sales, for the second quarter of 2020 compared to $17.5 million, or 28.2% of net sales, a year ago. The decrease in operating expenses was driven primarily by lower variable expenses associated with the decrease in sales.

Income from operations for the second quarter of 2020 was $3.1 million, or 5.5% of net sales compared to $3.9 million for the same period a year ago, or 6.4% of net sales. Adjusted operating income for the second quarter of 2020 was $4.1 million, or 7.3% of net sales.

Balance Sheet Review

Cash and cash equivalents increased $10.1 million, or 64.4%, to $25.8 million at June 30, 2020 compared to $15.7 million on the same date a year ago. During the second quarter of 2020, the Company repaid the $20 million it drew down on its credit facility in March 2020 as a precautionary measure in response to COVID-19. As of June 30, 2020, the Company had zero debt and $60 million in available borrowings on its credit facility.

Inventory at June 30, 2020 decreased 3.8% to $74.5 million compared to $77.5 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 second quarter 2020 results will be broadcast live over the internet today, Tuesday, July 28, 2020 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 the Company’s ability to face near-term challenges related to the COVID-19 pandemic (paragraph 4), the Company’s ability to sustain its recent momentum in performance (paragraph 4), and the Company’s positioning to navigate current headwinds and emerge from the pandemic poised for long-term success (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, 2019 (filed March 6, 2020) and quarterly report on Form 10-Q for the quarter ended March 31, 2020 (filed May 7, 2020). 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

June 30,

2020

2019

 

2019

ASSETS:

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

$

25,832

$

15,518

$

15,715

Trade receivables – net

 

35,362

 

45,585

 

40,910

Contract receivables

 

1,254

 

4,746

 

1,959

Other receivables

 

402

 

366

 

152

Inventories – net

 

74,546

 

76,731

 

77,458

Income tax receivable

 

-

 

150

 

1,361

Prepaid expenses

 

3,358

 

3,030

 

2,819

Total current assets

 

140,754

 

146,126

 

140,374

LEASED ASSETS

 

1,554

 

1,743

 

1,282

PROPERTY, PLANT & EQUIPMENT – net

 

28,450

 

27,423

 

24,041

IDENTIFIED INTANGIBLES – net

 

30,224

 

30,240

 

30,256

OTHER ASSETS

 

348

 

294

 

279

TOTAL ASSETS

$

201,330

$

205,826

$

196,232

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

$

15,962

$

15,776

$

20,182

Contract liabilities

 

1,254

 

4,746

 

1,959

Accrued expenses:

 

 

 

 

 

 

Salaries and wages

 

1,304

 

3,044

 

2,100

Taxes - other

 

778

 

967

 

667

Accrued freight

 

417

 

867

 

476

Commissions

 

392

 

608

 

491

Accrued duty

 

3,954

 

3,824

 

2,603

Other

 

2,176

 

1,702

 

1,767

Total current liabilities

 

26,237

 

31,534

 

30,245

LONG-TERM TAXES PAYABLE

 

169

 

169

 

169

LONG-TERM LEASE

 

967

 

1,158

 

776

DEFERRED INCOME TAXES

 

8,108

 

8,108

 

7,780

DEFERRED LIABILITIES

 

219

 

201

 

221

TOTAL LIABILITIES

 

35,700

 

41,170

 

39,191

SHAREHOLDERS' EQUITY:

 

 

 

 

 

 

Common stock, no par value;

 

 

 

 

 

 

25,000,000 shares authorized; issued and outstanding June 30, 2020 7,312,217; December 31, 2019 - 7,354,970 and June 30, 2019 - 7,393,851

 

67,390

 

67,993

 

69,013

Retained earnings

 

98,240

 

96,663

 

88,028

Total shareholders' equity

 

165,630

 

164,656

 

157,041

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

201,330

$

205,826

$

196,232

Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

June 30,

June 30,

 

2020

 

2019

 

2020

 

2019

NET SALES

$

56,186

$

61,959

$

111,905

$

127,888

COST OF GOODS SOLD

 

36,724

 

40,518

 

73,124

 

83,469

GROSS MARGIN

 

19,462

 

21,441

 

38,781

 

44,419

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

16,363

 

17,498

 

34,169

 

35,976

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

3,099

 

3,943

 

4,612

 

8,443

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

(48)

 

52

 

(57)

 

117

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

3,051

 

3,995

 

4,555

 

8,560

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE

 

609

 

839

 

925

 

1,798

 

 

 

 

 

 

 

 

 

NET INCOME

$

2,442

$

3,156

$

3,630

$

6,762

 

 

 

 

 

 

 

 

 

INCOME PER SHARE

 

 

 

 

 

 

 

 

Basic

$

0.33

$

0.43

$

0.50

$

0.92

Diluted

$

0.33

$

0.42

$

0.49

$

0.91

WEIGHTED AVERAGE NUMBER OF

 

 

 

 

 

 

 

 

COMMON SHARES OUTSTANDING

 

 

 

 

 

 

 

 

Basic

 

7,312

 

7,388

 

7,332

 

7,388

Diluted

 

7,334

 

7,431

 

7,360

 

7,436

Rocky Brands, Inc. and Subsidiaries
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

June 30,

June 30,

 

2020

 

2019

 

2020

 

2019

GROSS MARGIN

 

 

 

 

 

 

 

 

GROSS MARGIN, AS REPORTED

$

19,462

$

21,441

$

38,781

$

44,419

ADD: MANUFACTURING EXPENSES RELATED TO COVID-19 CLOSURES/SUPPLIES*

 

986

 

-

 

1,974

 

-

ADJUSTED GROSS MARGIN

$

20,448

$

21,441

$

40,755

$

44,419

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

$

16,363

$

17,498

$

34,169

$

35,976

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS, ADJUSTED

$

4,085

$

3,943

$

6,586

$

8,443

 

 

 

 

 

 

 

 

 

OTHER INCOME AND (EXPENSES):

 

(48)

 

52

 

(57)

 

117

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

 

 

 

 

 

 

NET INCOME, AS REPORTED

$

2,442

$

3,156

$

3,630

$

6,762

ADD: MANUFACTURING EXPENSES RELATED TO COVID-19 CLOSURES/SUPPLIES, AFTER TAX

 

789

 

-

 

1,570

 

-

ADJUSTED NET INCOME

$

3,231

$

3,156

$

5,200

$

6,762

 

 

 

 

 

 

 

 

 

NET INCOME PER SHARE, AS REPORTED

 

 

 

 

 

 

 

 

BASIC

$

0.33

$

0.43

$

0.50

$

0.92

DILUTED

$

0.33

$

0.42

$

0.49

$

0.91

 

 

 

 

 

 

 

 

 

ADJUSTED NET INCOME PER SHARE

 

 

 

 

 

 

 

 

BASIC

$

0.44

$

0.43

$

0.71

$

0.92

DILUTED

$

0.44

$

0.42

$

0.71

$

0.91

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

BASIC

 

7,312

 

7,388

 

7,332

 

7,388

DILUTED

 

7,334

 

7,431

 

7,360

 

7,436

* Adjustment related to the overhead, payroll expenses and supplies incurred during the temporary closure of our manufacturing facilities due to COVID-19.

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

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

Source: Rocky Brands, Inc.