ROCKY
BRANDS, INC.
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Company
Contact:
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Jim
McDonald
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Chief
Financial Officer
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(740)
753-1951
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Investor
Relations:
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ICR,
Inc.
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Brendon
Frey/Chad Jacobs
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(203)
682-8200
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ROCKY
BRANDS, INC. ANNOUNCES THIRD QUARTER FISCAL 2009 RESULTS
Earnings
Before Income Taxes (EBIT) Increased 53% to $4.4 million versus $2.9 million
Last Year
Funded
Debt Decreased $24.1 million, or 22% to $83.4 million
NELSONVILLE,
Ohio, October 22, 2009 – Rocky Brands, Inc. (Nasdaq: RCKY) today announced
financial results for its third quarter ended September 30, 2009.
For the
third quarter of 2009, net sales were $66.6 million versus net sales of $72.5
million in the third quarter of 2008. The Company’s earnings before income taxes
increased 53.4% to $4.4 million in third quarter 2009 compared to $2.9 million
in the same period last year. Net earnings increased 17.2% to $2.8 million, or
$0.50 per diluted share versus net earnings of $2.4 million, or $0.43 per
diluted share a year ago. In the third quarter of 2008, the Company received a
one-time prior year tax benefit of approximately $0.6 million, or $0.10 per
diluted share. Excluding this one-time benefit, third quarter 2009 diluted EPS
increased 51.5% to $.50 compared to $.33 in the third quarter of
2008.
Mike
Brooks, Chairman and Chief Executive Officer, commented, “We are very pleased
with our third quarter performance. Our recent results reflect the steps we have
taken over the last 18 months to reduce expenses and improve efficiency in order
to enhance our profitability and strengthen our balance sheet. For the fifth
consecutive quarter we lowered our operating expenses double digits on a
percentage basis as we continue to remove costs from our retail division by
transitioning more customer transactions to the internet. At the same time, our
ability to more effectively manage our inventory levels and receivables
decreased borrowings under our credit facility and lowered our interest expense
by 14%. Equally important, we began to see some stabilization of our
sales base with several of our wholesale categories – Hunting, Western, and Duty
– reporting positive gains. With inventories at retailers relatively
clean, we are optimistic we will continue to benefit from a higher frequency of
reorders and we are confident that we can deliver improved profitability
year-over-year during the fourth quarter.”
Third Quarter
Review
Net sales
for the third quarter decreased to $66.6 million compared to $72.5 million a
year ago. Wholesale sales for the third quarter decreased 2.1% to $54.5 million
compared to $55.6 million for the same period in 2008. Retail sales for the
third quarter were $11.5 million compared to $15.3 million for the same period
last year. Retail sales were down year-over-year as a result of the ongoing
transition to more internet driven transactions, and the decision to remove a
portion of our Lehigh mobile stores from operation to help lower costs as
discussed below. Military segment sales for the third quarter were $0.6 million
versus $1.6 million for the same period in 2008. Third quarter 2009 military
sales include the initial shipments of insulated boots under the $29 million
blanket purchase agreement the company received from the General Services
Administration (GSA) in July 2009.
Gross
margin in the third quarter of 2009 was $24.7 million, or 37.1% of sales
compared to $27.1 million, or 37.4% for the same period last year.
Selling,
general and administrative (SG&A) expenses decreased $3.4 million or 15.4%
to $18.6 million, or 27.9% of sales for the third quarter of 2009 compared to
$22.0 million, or 30.3% of sales, a year ago. The decrease in SG&A expenses
was primarily the result of a reduction in salaries & benefits, freight,
Lehigh mobile store expenses and tradeshow expenses.
Income
from operations increased $1.0 million, or 19.8% to $6.1 million, or 9.2% of
sales for the period compared to income from operations of $5.1 million, or 7.1%
sales in the prior year.
Interest
expense decreased $0.3 million or 14.4% to $2.0 million for the third quarter of
2009 versus $2.3 million for the same period last year. The decrease is the
result of a reduction in average borrowings combined with lower interest rates
compared to the same period last year.
The
Company’s funded debt decreased $24.1 million, or 22.4% to $83.4 million at
September 30, 2009 versus $107.6 million at September 30, 2008.
Inventory
decreased $15.3 million, or 18.3%, to $68.1 million at September 30, 2009
compared with $83.3 million on the same date a year ago.
The
Company’s accounts receivable decreased 19.8% to $58.3 million at September 30,
2009 versus $72.7 million at September 30, 2008.
Conference Call
Information
The
Company’s conference call to review third quarter fiscal 2009 results will be
broadcast live over the internet today, Thursday, October 22, 2009 at 4:30 pm
Eastern Time. The broadcast will be hosted at
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 Outdoor Gear®, Georgia Boot®, Durango®, Lehigh®, and the
licensed brands Dickies®, Michelin® and Mossy Oak®.
Safe
Harbor Statement under the Private Securities Litigation Reform Act of
1995
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 a higher frequency of reorders and
improved profitability (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, 2008 (filed March 3, 2009) and the Company’s quarterly report on Form 10-Q
for the quarters ended March 31, 2009 (filed May 4, 2009) and June 30, 2009
(filed July 31, 2009). 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
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September
30, 2009
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December
31, 2008
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September
30, 2008
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Unaudited
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Unaudited
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ASSETS:
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CURRENT
ASSETS:
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Cash
and cash equivalents
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$
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4,002,909
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$
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4,311,313
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$
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4,332,477
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Trade
receivables – net
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58,296,661
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60,133,493
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72,654,591
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Other
receivables
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1,598,829
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1,394,235
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1,289,396
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Inventories
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68,065,444
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70,302,174
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83,320,590
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Deferred
income taxes
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2,173,391
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2,167,966
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1,978,946
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Prepaid
and refundable income taxes
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247,011
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75,481
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-
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Prepaid
expenses
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1,949,885
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1,455,158
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2,366,859
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Total
current assets
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136,334,130
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139,839,820
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165,942,859
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FIXED
ASSETS – net
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23,132,489
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23,549,319
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24,254,455
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IDENTIFIED
INTANGIBLES
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30,627,527
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31,020,478
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36,044,132
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OTHER
ASSETS
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2,677,353
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2,452,501
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2,154,179
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TOTAL
ASSETS
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$
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192,771,499
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$
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196,862,118
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$
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228,395,625
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LIABILITIES
AND SHAREHOLDERS' EQUITY:
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CURRENT
LIABILITIES:
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Accounts
payable
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$
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7,683,778
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$
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9,869,948
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$
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14,492,182
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Current
maturities – long term debt
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503,841
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480,723
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464,846
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Accrued
expenses:
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Taxes
- other
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387,817
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641,670
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612,445
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Other
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5,987,861
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4,261,689
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7,076,926
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Total
current liabilities
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14,563,297
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15,254,030
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22,646,399
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LONG
TERM DEBT – less current maturities
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82,940,392
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87,258,939
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107,115,967
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DEFERRED
INCOME TAXES
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9,558,761
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9,438,921
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12,569,600
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DEFERRED
LIABILITIES
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4,116,613
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3,960,472
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1,170,026
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TOTAL
LIABILITIES
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111,179,063
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115,912,362
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143,501,992
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SHAREHOLDERS'
EQUITY:
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Common
stock, no par value;
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25,000,000
shares authorized; issued and outstanding September 30, 2009 - 5,547,215;
December 31, 2008 - 5,516,898; September 30, 2008 -
5,508,398
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54,387,752
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54,250,064
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54,193,211
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Accumulated
other comprehensive loss
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(2,982,564
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)
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(3,222,215
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)
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(1,462,344
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)
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Retained
earnings
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30,187,248
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29,921,907
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32,162,766
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Total
shareholders' equity
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81,592,436
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80,949,756
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84,893,633
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TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
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$
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192,771,499
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$
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196,862,118
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$
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228,395,625
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Rocky Brands, Inc. and
Subsidiaries
Condensed
Consolidated Statements of Operations
(Unaudited)
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Three
Months Ended
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Nine
Months Ended
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September
30,
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September
30,
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2009
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2008
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2009
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2008
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NET
SALES
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$
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66,572,437
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$
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72,500,603
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$
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167,825,613
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$
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193,492,740
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COST
OF GOODS SOLD
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41,856,651
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45,414,533
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105,299,667
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116,060,912
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GROSS
MARGIN
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24,715,786
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27,086,070
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62,525,946
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77,431,828
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SELLING,
GENERAL AND
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ADMINISTRATIVE
EXPENSES
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18,576,780
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21,961,032
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56,642,081
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65,897,978
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INCOME
FROM OPERATIONS
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6,139,006
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5,125,038
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5,883,865
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11,533,850
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OTHER
INCOME AND (EXPENSES):
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Interest
expense
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(1,955,485
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)
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(2,285,051
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)
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(5,665,905
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)
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(7,101,237
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)
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Other
– net
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224,442
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34,254
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257,899
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31,385
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Total
other - net
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(1,731,043
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)
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(2,250,797
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)
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(5,408,006
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)
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(7,069,852
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)
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INCOME
BEFORE INCOME TAXES
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4,407,963
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2,874,241
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475,859
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4,463,998
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INCOME
TAX EXPENSE
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1,626,518
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500,000
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210,518
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1,056,000
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|
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NET
INCOME
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$
|
2,781,445
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$
|
2,374,241
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$
|
265,341
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|
$
|
3,407,998
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NET
INCOME PER SHARE
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Basic
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$
|
0.50
|
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$
|
0.43
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$
|
0.05
|
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$
|
0.62
|
|
|
Diluted
|
|
$
|
0.50
|
|
|
$
|
0.43
|
|
|
$
|
0.05
|
|
|
$
|
0.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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WEIGHTED
AVERAGE NUMBER OF
|
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COMMON
SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
5,547,215
|
|
|
|
5,508,398
|
|
|
|
5,546,993
|
|
|
|
5,508,252
|
|
|
Diluted
|
|
|
5,547,215
|
|
|
|
5,512,634
|
|
|
|
5,546,993
|
|
|
|
5,518,138
|
|