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Third Quarter Fiscal 2008 Financial Results
Tuesday, October 28, 2008
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Rocky Shoes & Boots, Inc. Reports
Record Second Quarter Revenues and Earnings
CONTACT:
Rocky Shoes & Boots, Inc.
Jim McDonald
Chief Financial Officer
(740) 753-1951 |
Integrated Corporate Relations, Inc.
Investor Relations:
Brendon E. Frey/Chad A. Jacobs
(203) 682-8200 |
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Media Relations:
Megan McDonnell
(203) 682-8200
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NELSONVILLE, Ohio -- July 27, 2005 -- Rocky Shoes & Boots, Inc. (Nasdaq: RCKY):
-- Second Quarter Revenues Increase 139% to a Record $65.5 million --
-- Reports Record Second Quarter Diluted Earnings Per Share of $0.50 --
-- Company Reiterates Fiscal 2005 Guidance --
Rocky Shoes & Boots, Inc. (Nasdaq: RCKY) today announced record financial results for the second quarter and six month period ended June 30, 2005.
For the three months ended June 30, 2005, net sales increased 139% to a record $65.5 million compared to $27.4 million for the corresponding period a year ago. Net income rose to a record $2.8 million versus net income of $1.4 million and diluted earnings per share increased to $0.50 versus $0.29 last year.
For the six months ended June 30, 2005, net sales increased 158% to a record $127.0 million compared to net sales of $49.3 million for the six months ended June 30, 2004. Net income rose to $3.9 million versus net income of $1.5 million a year ago, and diluted earnings per share increased to $0.70 versus $0.31 for the corresponding period last year.
On January 6, 2005, Rocky Shoe & Boots, Inc. completed the acquisition of EJ Footwear Group. The results for the three month and six month period ended June 30, 2005 represent the performance of the consolidated company, while the year ago results reflect Rocky Shoes & Boots on a stand-alone basis.
Mike Brooks, Chairman and Chief Executive Officer of Rocky Shoes & Boots, stated, "We are very pleased with our results for the quarter, which were primarily driven by a strong increase in sales and significant gross margin expansion. Our financial performance continues to benefit from the acquisition of EJ Footwear, evidenced by our record revenues and earnings during the first half of fiscal 2005. The combination of Rocky and EJ Footwear has created a powerful new operating platform and we are committed to capitalizing on our growing position in the market."
Second Quarter Results
Net sales for the second quarter increased 139% to $65.5 million compared to $27.4 million a year ago. The second quarter results reflect the acquisition of EJ Footwear, which contributed $38.0 million in revenue during the three month period ended June 30, 2005.
Gross profit in the second quarter of 2005 increased to $25.7 million, or 39.3% of sales, from $7.8 million or 28.3% of sales, for the same period last year. The 1100 basis point increase was primarily due to sales of EJ Footwear product which carry a higher gross margin than Rocky products.
Selling, general and administrative (SG&A) expenses were $19.5 million, or 29.7% of sales for the second quarter of 2005 compared to $5.4 million, or 19.7% of sales, a year ago. The increase was primarily a result of higher SG&A associated with the EJ Footwear business.
Income from operations increased to $6.2 million or 9.5% of net sales for the period from $2.4 million or 8.7% of net sales in the prior year.
Six Month Results
Net sales for the six months ended June 30, 2005 increased 158% to $127 million compared to $49.3 million a year ago. This was primarily a result of the EJ Footwear acquisition, which contributed $77.9 million in revenue during the period.
Gross profit increased to $49.9 million, or 39.3% of sales, from $13.4 million or 27.2% of sales, for the same period last year. The 1210 basis point increase was primarily due to sales of EJ Footwear product which carry a higher gross margin than Rocky products.
Selling, general and administrative (SG&A) expenses were $40.1 million, or 31.6% of sales compared to $10.7 million, or 21.7% of sales, a year ago. The increase was primarily a result of higher SG&A associated with the EJ Footwear business.
Income from operations increased to $9.8 million or 7.7% of net sales versus $2.7 million or 5.4% of net sales in the prior year.
Funded Debt and Interest Expense
The Company's funded debt at June 30, 2005 was $110.7 million versus $22.0 million at June 30, 2004. The year-over-year increase was principally due to borrowings under the credit facility to fund the purchase of EJ Footwear. Interest expense increased to $2.1 million for the second quarter fiscal 2005, versus $0.3 million for same period last year, primarily due to the increase in borrowings.
Inventory
Inventory increased to $85.4 million at June 30, 2005 compared with $38.6 million on the same date a year ago, primarily due to the acquisition of EJ Footwear.
Outlook
The Company stated it remains comfortable with its previously issued guidance for fiscal 2005 of net sales in the range of $300 million to $305 million and earnings per share in the range of $2.55 to $2.65.
Mr. Brooks concluded, "As we head into the fall and winter selling seasons we believe we are well positioned to deliver continued success in the back half of the year. Our entire team has worked extremely hard integrating the Rocky and EJ organizations and we are very encouraged by our progress to date. Over the past 6-months we have successfully diversified our brands, product, and distribution to become a more balanced company, both operationally and financially, and move forward excited about the many long-term opportunities we have created."
About Rocky Shoes & Boots, Inc.
Rocky Shoes & Boots, Inc. designs, develops, manufactures and markets premium quality rugged outdoor, occupational, and casual footwear, as well as branded apparel and accessories. The Company's footwear, apparel and accessories are marketed through several distribution channels, primarily under owned brands, ROCKY(R) and GATES(R), and as a result of the acquisition of EJ Footwear, GEORGIA BOOT(R), LEHIGH(R), DURANGO, and the licensed brand DICKIES(R).
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 future synergies from the EJ Footwear acquisition and future business prospects (paragraphs 5 and 17) and management's sales and earnings guidance for fiscal 2005 (paragraph 16). 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, 2004 (filed March 16, 2005) and quarterly report on Form 10-Q for the quarter ended March 31, 2005 (filed May 10, 2005). 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 Balance Sheets
June 30, 2005December 31, June 30, 2004
Unaudited 2004 Unaudited
-------------- ------------ -------------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $1,015,645 $5,060,859 $492,408
Trade receivables - net 56,654,184 27,182,198 27,422,370
Other receivables 1,365,390 1,114,959 863,709
Inventories 85,410,975 32,959,124 38,641,868
Deferred income taxes 1,297,850 230,151 959,810
Income tax receivable 2,264,531
Prepaid expenses 1,530,587 588,618 1,105,070
------------- ----------- -----------
Total current assets 147,274,631 69,400,440 69,485,235
FIXED ASSETS - net 23,139,177 20,179,486 19,055,324
DEFERRED PENSION ASSET 1,347,825 1,347,824 1,499,524
IDENTIFIED INTANGIBLES 47,140,205 2,561,427 2,586,021
GOODWILL 20,524,421 1,557,861 1,649,732
OTHER ASSETS 4,293,065 1,658,616 436,929
------------- ----------- ------------
TOTAL ASSETS $243,719,324 $96,705,654 $94,712,765
============= =========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY:
CURRENT LIABILITIES:
Accounts payable $17,626,282 $4,349,248 $6,829,747
Current maturities - long term
debt 6,384,242 6,492,020 518,226
Accrued expenses:
Income taxes 1,002,853 45,064
Taxes - other 587,405 422,692 491,828
Salaries and wages 2,094,912 1,295,722 988,107
Plant closing costs - 63,228
Other 4,338,834 1,228,708 636,805
------------- ----------- ------------
Total current liabilities 32,034,528 13,788,390 9,573,005
LONG TERM DEBT-less current
maturities 104,336,905 10,044,544 21,493,872
DEFERRED INCOME TAXES 18,527,196 1,205,814 262,907
DEFERRED LIABILITIES 1,326,347 296,108 1,962,160
------------- ----------- ------------
TOTAL LIABILITIES 156,224,976 25,334,856 33,291,944
SHAREHOLDERS' EQUITY:
Common stock, no par value; 50,623,315 38,399,114 36,396,070
Accumulated other comprehensive
loss (1,077,586) (1,077,586) (1,950,400)
Retained earnings 37,948,619 34,049,270 26,975,151
------------- ------------ -----------
Total shareholders' equity 87,494,348 71,370,798 61,420,821
------------- ------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $243,719,324 $96,705,654 $94,712,765
============= =========== ============
Rocky Shoes & Boots, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- --------------------------
2005 2004 2005 2004
------------ ------------ ------------- ------------
NET SALES $65,519,637 $27,433,987 $127,017,721 $49,316,076
COST OF GOODS SOLD 39,796,398 19,657,778 77,086,610 35,921,263
------------ ------------ ------------- ------------
GROSS MARGIN 25,723,239 7,776,209 49,931,111 13,394,813
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 19,484,789 5,396,376 40,146,472 10,724,067
------------ ------------ ------------- ------------
INCOME FROM
OPERATIONS 6,238,450 2,379,833 9,784,639 2,670,746
OTHER INCOME AND
(EXPENSES):
Interest expense (2,115,578) (274,868) (3,994,170) (533,441)
Other - net 126,889 24,182 117,644 98,388
------------ ------------ ------------- ------------
Total other - net (1,988,689) (250,686) (3,876,526) (435,053)
INCOME BEFORE
INCOME TAXES 4,249,761 2,129,147 5,908,113 2,235,693
INCOME TAX EXPENSE 1,444,864 681,325 2,008,759 715,420
------------ ------------ ------------- ------------
NET INCOME $2,804,897 $1,447,822 $3,899,354 $1,520,273
============ ============ ============= ============
NET INCOME PER SHARE
Basic $0.53 $0.32 $0.75 $0.34
Diluted $0.50 $0.29 $0.70 $0.31
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING
Basic 5,244,395 4,557,954 5,204,107 4,492,989
============ ============ ============= ============
Diluted 5,625,169 5,003,956 5,589,643 4,949,805
============ ============ ============= ============
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