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Rocky Brands, Inc. Announces First Quarter Fiscal 2009 Results
Rocky Brands, Inc.
Jim McDonald
(740) 753-1951
Chief Financial Officer |
Investor Relations:
Integrated Corporate Relations, Inc.
Brendon Frey / Chad Jacobs
(203) 682-8200 |
NELSONVILLE, Ohio -- April 28, 2009 --Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its first quarter ended March 31, 2009.
For the first quarter of 2009, net sales decreased to $50.1 million versus net sales of $60.5 million in the first quarter of 2008. The Company reported a net loss of $1.1 million, or ($0.20) per diluted share versus net income of $0.3 million, or $0.05 per diluted share a year ago.
Mike Brooks, Chairman and Chief Executive Officer, commented, “As we started the year we anticipated that our top-line would remain under pressure due to the challenging economic environment combined with the tough comparisons we were up against in our retail division during the first quarter. Therefore we continue to focus on better aligning our cost structure with lower sales volumes and this was reflected in a 13%, or $3 million reduction in our SG&A versus a year ago. We are also focused on improving the profitability of our retail segment by transitioning a greater percentage of those transactions to the Internet and we are pleased by our initial progress. Looking ahead, we are confident that the strength and diversity of our brand portfolio is intact, and we remain committed to balancing our spending with current growth opportunities until market conditions improve.”
First Quarter Review
Net sales for the first quarter decreased to $50.1 million compared to $60.5 million a year ago. Wholesale sales for the first quarter were $36.0 million compared to $39.7 million for the same period in 2008. The decline in wholesale sales was primarily attributable to lower than expected orders as many accounts are choosing to operate with leaner inventory levels during this challenging economy. Retail sales for the first quarter were $13.7 million compared to $18.9 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 operations to help lower costs as discussed below. Military segment sales for the first quarter were $0.3 million versus $1.8 million for the same period in 2008.
Gross margin in the first quarter of 2009 was $20.1 million, or 40.1% of sales compared to $25.9 million, or 42.9% for the same period last year. The decrease in gross margin as a percentage of sales was primarily attributable to lower retail sales, which carry a higher gross margin, and to a lesser extent, lower wholesale gross margins due to increased manufacturing costs versus a year ago.
Selling, general and administrative (SG&A) expenses decreased $3.1 million or 13.5% to $19.9, or 39.8% of sales for the first quarter of 2009 compared to $23.1 million, or 38.1% of sales, a year ago. The decrease in SG&A expenses was primarily the result of a reduction in salaries & benefits, advertising, sales commissions, freight, professional fees and Lehigh mobile store expenses.
Income from operations was $0.1 million, or 0.3% of net sales, for the period compared to $2.9 million, or 4.8% of net sales, in the prior year.
Interest expense decreased $0.6 million, or 26.3% to $1.8 million for the first quarter of 2009 versus $2.4 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 $7.9 million, or 8.4% to $86.2 million at March 31, 2009 versus $94.1 million at March 31, 2008.
Inventory decreased $1.4 million, or 1.8%, to $78.4 million at March 31, 2009 compared with $79.8 million on the same date a year ago.
Conference Call Information
The Company’s conference call to review first quarter fiscal 2009 results will be broadcast live over the internet today, Tuesday, April 28, 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. 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). 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
June 30, 2009 December 31, 2008 June 30, 2008
Unaudited Unaudited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 2,865,461 $ 4,311,313 $ 3,025,144
Trade receivables - net 44,454,476 60,133,493 59,245,156
Other receivables 1,924,195 1,394,235 1,010,254
Inventories 79,286,477 70,302,174 85,542,820
Deferred income taxes 2,167,966 2,167,966 1,952,536
Prepaid & refundable income 2,413,523 75,481 729,024
taxes
Prepaid expenses 1,396,308 1,455,158 2,703,446
Total current assets 134,508,406 139,839,820 154,208,380
FIXED ASSETS - net 23,777,945 23,549,319 24,090,519
IDENTIFIED INTANGIBLES 30,769,248 31,020,478 36,207,210
OTHER ASSETS 4,236,066 2,452,501 2,323,778
TOTAL ASSETS $ 193,291,665 $ 196,862,118 $ 216,829,887
LIABILITIES AND SHAREHOLDERS'
EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 8,504,099 $ 9,869,948 $ 13,238,830
Current maturities - long term 495,976 480,723 338,314
debt
Accrued expenses:
Taxes - other 502,032 641,670 840,751
Other 4,504,202 4,261,689 4,703,591
Total current liabilities 14,006,309 15,254,030 19,121,486
LONG TERM DEBT - less current 87,023,125 87,258,939 101,042,347
maturities
DEFERRED INCOME TAXES 9,438,921 9,438,921 12,951,828
DEFERRED LIABILITIES 4,095,782 3,960,472 1,257,606
TOTAL LIABILITIES 114,564,137 115,912,362 134,373,267
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized;
issued and outstanding June 30, 54,384,172 54,250,064 54,168,292
2009 - 5,547,215; December 31,
2008 - 5,516,898; June 30, 2008
- 5,508,278
Accumulated other comprehensive (3,062,448) (3,222,215) (1,500,197)
loss
Retained earnings 27,405,804 29,921,907 29,788,525
Total shareholders' equity 78,727,528 80,949,756 82,456,620
TOTAL LIABILITIES AND $ 193,291,665 $ 196,862,118 $ 216,829,887
SHAREHOLDERS' EQUITY
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
NET SALES $ 51,188,615 $ 60,507,421 $ 101,253,176 $ 120,992,137
COST OF GOODS SOLD 33,470,943 36,111,328 63,443,016 70,646,379
GROSS MARGIN 17,717,672 24,396,093 37,810,160 50,345,758
SELLING, GENERAL AND
ADMINISTRATIVE 18,119,173 20,875,459 38,065,301 43,936,946
EXPENSES
(LOSS)/INCOME FROM (401,501) 3,520,634 (255,141) 6,408,812
OPERATIONS
OTHER INCOME AND
(EXPENSES):
Interest expense (1,936,490) (2,409,515) (3,710,420) (4,816,186)
Other - net 158,023 15,723 33,457 (2,869)
Total other - net (1,778,467) (2,393,792) (3,676,963) (4,819,055)
(LOSS)/INCOME BEFORE (2,179,968) 1,126,842 (3,932,104) 1,589,757
INCOME TAXES
INCOME TAX (785,000) 394,000 (1,416,000) 556,000
(BENEFIT)/EXPENSE
NET (LOSS)/INCOME $ (1,394,968) $ 732,842 $ (2,516,104) $ 1,033,757
NET (LOSS)/INCOME PER
SHARE
Basic $ (0.25) $ 0.13 $ (0.45) $ 0.19
Diluted $ (0.25) $ 0.13 $ (0.45) $ 0.19
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
Basic 5,547,215 5,508,278 5,546,880 5,508,058
Diluted 5,547,215 5,520,625 5,546,880 5,523,265
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