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Third Quarter Fiscal 2008 Financial Results
Tuesday, October 28, 2008
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Rocky Shoes & Boots, Inc. Reports
Record First Quarter Net Sales
Branded sales up 24%
Earnings per share $0.01 versus loss of $0.14 last year
CONTACT:
Jim McDonald
Vice President & CFO
(740) 753-1951
NELSONVILLE, Ohio -- April 29, 2004 -- Rocky Shoes & Boots, Inc. (NASDAQ: RCKY) today reported record net sales for the three months ended March 31, 2004.
Net income increased to $0.1 million, or $0.01 per diluted share, for the three months ended March 31, 2004 compared to a net loss of $0.6 million, or $0.14 per diluted share, the prior year. The improvement in net income per share was achieved despite a 14% increase in the weighted average number of diluted shares outstanding for the first quarter 2004 compared to the first quarter 2003. This resulted from the increase in the Company's share price during the past year.
Mike Brooks, Chairman and Chief Executive Officer, commented, "Our record first quarter results benefited from a 24% increase in branded sales and from the shipment of boots for delivery to the U.S. military. Importantly, these results reflect a solid increase in sales of work footwear, which is sold throughout the year. During the first quarter 2004 we introduced apparel for the work market as part of our head-to-toe growth strategy. We are pleased with initial bookings and believe these initiatives represent a significant opportunity to leverage our brands and, over time, contribute to reducing the seasonality of our business."
Mr. Brooks continued, "In March 2004 we announced a $16.4 million subcontract agreement to produce boots for the U.S. military. Shipment of these boots will begin in June 2004 and continue at the rate of approximately $1.6 million per 30-day period. While our growth strategy is not focused on the military market, we are pleased to produce these boots when manufacturing capacity is available at our factory in Puerto Rico. We anticipate there may be additional opportunities to produce branded boots for the U.S. military in the future."
First Quarter Results
Net sales increased to a first quarter record $21.9 million compared to $13.8 million for the same period in 2003. This 59.1% increase was led by higher branded sales and shipments of boots to the U.S. military, which rose $3.1 million and $5.0 million, respectively. Substantial growth was achieved in the ROCKY® Work footwear as well as the Outdoor apparel and footwear categories. Sales of GATES® products, a brand that was acquired in the second quarter 2003, also contributed to the first quarter 2004 net sales increase.
Gross profit increased to $5.6 million, or 25.7% of net sales for the first quarter 2004 from $3.5 million, or 25.2% of net sales, the prior year. First quarter 2004 gross margin was influenced by the boots produced for delivery to the U.S. military and an increase in sourced product sales. The Company manufactures military boots at lower gross margin than its branded products, while sourced products result in higher gross margin than the Company's overall average. Sourced product sales were 49.6% of net sales for the first quarter 2004 compared to 49.1% for the same period last year.
Selling, general and administrative ("SG&A") expenses were $5.3 million, or 24.3% of net sales, for the quarter ended March 31, 2004 compared to $4.3 million, or 30.9% of net sales, the prior year. The increase in SG&A expenses was primarily due to higher commissions and distribution costs associated with the growth in branded product sales, and industry trade show expense compared to a year ago.
Income from operations was $0.3 million for first quarter 2004 versus a loss from operations of $0.8 million for the same period last year.
Funded Debt
The Company reduced its funded debt $3.5 million to $14.5 million at March 31, 2004 compared to year-end 2003. Funded debt was $10.8 million at March 31, 2003 and since that date the Company increased borrowings to purchase certain assets of Gates-Mills, Inc., repurchased 483,500 of the Company's common shares in the second quarter 2003, and increased inventory to support sales growth.
Inventory
Inventory declined $3.0 million to $35.1 million at March 31, 2004 from $38.1 million at December 31, 2003. The $6.8 million increase in inventory since March 31, 2003 was primarily to support increased sales of branded products, including new line extensions of footwear and apparel for the ROCKY® and GATES® brands.
Outlook
The Company is increasing its earnings guidance for the year 2004 due to the first quarter 2004 results and the accretive impact of the previously announced subcontract agreement to produce boots for the U.S. military.
Net sales are anticipated to be approximately $133 million for the year 2004, which is $11 million higher than previous guidance and $27 million above net sales for the year 2003. This sales growth is attributable to solid increases in branded products, footwear, apparel and accessories, and shipment of boots for delivery to the U.S. military.
If the Company achieves net sales of at least $133 million for the year 2004, then net income is expected to be approximately $1.75 per diluted share for the year 2004 compared to previous guidance of $1.54 per diluted share and $1.32 per diluted share for the year 2003. The Company cautions investors that the net sales and earnings outlook for the year ended December 31, 2004 is based on current market conditions and management's expectations. If net sales do not reach $133 million, then actual earnings may be less than this guidance.
Conference Call
The Company is conducting a conference call at 10 a.m. Eastern Time on Thursday, April 29, 2004 to discuss the first quarter financial results, key business trends and outlook for 2004. Persons interested in listening to the call can access it through www.rockyboots.com and clicking on the button "First Quarter 2003 Conference Call".
About Rocky Shoes & Boots, Inc.
Rocky Shoes & Boots, Inc. designs, develops, manufactures and markets premium quality rugged outdoor, occupational, work and casual footwear, as well as branded clothing and accessories. The Company's footwear, apparel and accessories are marketed through several distribution channels, primarily under the registered trademarks, ROCKY and GATES.
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 initial bookings of work apparel and the belief that these initiatives represent a significant opportunity to leverage the Company's brands and, over time, contribute to reducing the seasonality of its business (paragraph 3), shipments of $16.4 million of boots for the delivery to the U.S. military beginning in June 2004 and continuing at the rate of $1.6 million per 30-day period, and management's anticipation there may be additional opportunities to produce branded boots for the U.S. military in the future (paragraph 4), increase in the Company's earnings guidance for the year 2004 due to the results for first quarter 2004 and the accretive impact of the previously announced subcontract agreement to produce boots for the U.S. military (paragraph 11), anticipation that net sales will be approximately $133 million for the year 2004 due to solid increases in branded products, footwear, apparel and accessories, and shipment of boots for delivery to the U.S. military (paragraph 12), if the Company achieves net sales of at least $133 million for the year 2004, then net income is expected to be approximately $1.75 per diluted share for the year 2004 (paragraph 13). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the risks that sales plans will not be met, that present orders may be cancelled or delayed, that the general economy or consumer spending habits will depress the market for the Company's products, that there may be disruption in the shipment of products from overseas to the Company, that the weather in 2004 is drier and warmer than normal, and all of the other 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, 2003. 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 Shoes & Boots, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
2004 2003
(Unaudited) (Unaudited)
NET SALES $21,882,089 $13,754,941
COST OF GOODS SOLD 16,263,485 10,289,413
GROSS MARGIN 5,618,604 3,465,528
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 5,327,691 4,250,606
INCOME/(LOSS) FROM OPERATIONS 290,913 (785,078)
OTHER INCOME AND (EXPENSES):
Interest expense (258,573) (196,180)
Other - net 74,206 91,873
Total other - net (184,367) (104,307)
INCOME/(LOSS) BEFORE INCOME TAX 106,546 (889,385)
INCOME TAX EXPENSE/(BENEFIT) 34,095 (266,816)
NET INCOME/(LOSS) $72,451 $(622,569)
NET INCOME/(LOSS) PER SHARE
Basic $0.02 $(0.14)
Diluted $0.01 $(0.14)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 4,428,023 4,363,115
Diluted 4,971,568 4,363,115
Rocky Shoes & Boots, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 2004 December 31, 2003 March 31, 2003
(unaudited) (unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,164,802 $2,159,050 $2,391,867
Trade receivables - net 17,657,161 19,532,287 10,639,471
Other receivables 842,220 830,131 1,854,435
Inventories 35,135,584 38,068,187 28,342,873
Deferred income taxes 959,810 959,810 578,951
Prepaid expenses 1,132,264 1,045,238 1,748,220
Total current assets 56,891,841 62,594,703 45,555,817
FIXED ASSETS - net 17,325,445 17,610,238 18,770,432
DEFERRED PENSION ASSET 1,499,524 1,499,524 1,651,222
DEFERRED INCOME TAXES 0 0 153,495
OTHER ASSETS 4,498,312 4,470,371 1,842,517
TOTAL ASSETS $ 80,215,122 $ 86,174,836 $ 67,973,483
LIABILITIES AND
SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $2,082,062 $2,810,161 $4,881,731
Current maturities -
long-term debt 511,006 503,934 488,169
Accrued taxes - other 451,917 372,432 410,500
Accrued salaries and wages 644,661 1,885,896 712,192
Accrued plant closing costs 75,500 195,500 210,000
Accrued income taxes 380,652 1,929,808 0
Accrued other 346,083 686,934 393,097
Total current liabilities 4,491,881 8,384,665 7,095,689
LONG TERM DEBT - less
current maturities 13,998,680 17,514,994 10,340,806
DEFERRED LIABILITIES 2,057,783 1,890,500 1,687,053
TOTAL LIABILITIES 20,548,344 27,790,159 19,123,548
SHAREHOLDERS' EQUITY:
Common stock, no par value 36,089,849 34,880,199 32,368,617
Accumulated other
comprehensive loss (1,950,400) (1,950,400) (2,311,749)
Retained earnings 25,527,329 25,454,878 18,793,067
Total shareholders'
equity 59,666,778 58,384,677 48,849,935
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 80,215,122 $ 86,174,836 $ 67,973,483
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