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Rocky Brands, Inc. Announces Fourth Quarter and 2009 Full Year Results
Fourth Quarter Non-GAAP Diluted Earnings Per Share Improves 85% to $0.24
Funded Debt Decreased $32.1 million, or 37% to $55.6 Million
Inventories Declined 21% to $55.4 Million
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 -- February 18, 2010 -- Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its fourth quarter and fiscal year ended December 31, 2009.
For the fourth quarter of 2009, net sales were $61.7 million versus net sales of $66.0 million in the fourth quarter of 2008. The Company reported net income of $0.9 million, or $0.16 per diluted share in 2009, versus a net loss of $2.2 million, or ($0.41) per diluted share for the fourth quarter of 2008.
The Company reported Non-GAAP earnings of $0.24 per diluted share in the fourth quarter of 2009, excluding restructuring charges of ($0.08) per diluted share associated with the closing of fifteen mini warehouses that the Company operated under its Lehigh retail division and the relocation of its customer service center to Nelsonville from Nashville compared to earnings of $0.13 per diluted share in the fourth of quarter 2008, excluding non-cash charges of ($0.54) per diluted share for the write-down of the Lehigh and Gates trademarks. A reconciliation of income per diluted share on a GAAP basis to income per diluted share excluding the restructuring and non-cash impairment charges is shown below.
Mike Brooks, Chairman and Chief Executive Officer, commented "Throughout 2009 we focused on taking costs out of our business and improving the efficiency of our organization. Our efforts led to fourth quarter operating results that exceeded expectations and represented a solid ending to the year. We are very pleased with our bottom line performance compared with the year ago quarter and equally excited about the improvement in our balance sheet. Better management of our receivables and inventories allowed us to significantly reduce borrowings on our credit facility during the past 12-months and resulted in year-end debt levels down 37%. At the same time, we have made meaningful progress restructuring our retail division as well as developing innovative new product lines and brand extensions for our wholesale channels. We begin 2010 optimistic about our growth prospects and committed to leveraging our leaner operating platform to drive enhanced profitability."
Fourth Quarter Review
Net sales for the fourth quarter decreased to $61.7 million compared to $66.0 million a year ago. Wholesale sales for the fourth quarter decreased 7.3% to $45.9 million compared to $49.5 million for the same period in 2008. Retail sales for the fourth quarter were $12.5 million compared to $15.4 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 fourth quarter were $3.3 million versus $1.2 million for the same period in 2008. Fourth 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 fourth quarter of 2009 was $22.0 million, or 35.7% of sales compared to $24.8 million, or 37.6% for the same period last year. The 190 basis point decrease is primarily due to the increase in sales in our military segment which carry lower gross margins than our retail and wholesale segments.
Selling, general and administrative (SG&A) expenses decreased $3.2 million or 14.7% to $18.4 million, or 29.9% of sales for the fourth quarter of 2009 compared to $21.6 million, or 32.7% of sales, a year ago. The decrease in SG&A expenses was primarily the result of a reduction in salaries & benefits, advertising expense, Lehigh mobile store expenses and bad debt expense.
Income from operations, excluding restructuring charges increased to $3.6 million, or 5.8% of sales for the period compared to income from operations, excluding the non-cash intangible impairment charges, of $3.2 million, or 4.9% sales in the prior year.
Interest expense decreased $0.4 million or 17.3% to $1.8 million for the fourth quarter of 2009 versus $2.2 million for the same period last year. The decrease is primarily the result of a reduction in average borrowings compared to the same period last year.
The Company's funded debt decreased $32.1 million, or 36.6% to $55.6 million at December 31, 2009 versus $87.7 million at December 31, 2008.
Inventory decreased $14.9 million, or 21.2%, to $55.4 million at December 31, 2009 compared with $70.3 million on the same date a year ago.
The Company's accounts receivable decreased $14.3 million, or 23.8% to $45.8 million at December 31, 2009 versus $60.1 million at December 31, 2008.
Full Year 2009 Results
For the full year 2009, net sales were $229.5 million versus net sales of $259.5 million in 2008. The Company reported net income of $1.2 million, or $0.21 per diluted share in 2009, versus net income of $1.2 million, or $0.21 per diluted share in 2008.
Excluding the aforementioned charges, the Company reported Non-GAAP earnings of $0.29 per diluted share for the full year of 2009 compared to earnings of $0.75 per diluted share in 2008. A reconciliation of income per diluted share on a GAAP basis to income per diluted share excluding the restructuring and non-cash impairment charges is shown below.
Reconciliation of Income per Diluted Share on GAAP Basis to a non-GAAP Basis
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
Income / (loss) per diluted share on a $ 0.16 $ (0.41 ) $ 0.21 $ 0.21
GAAP Basis
Restructuring charges $ 0.08 $ - $ 0.08 $ -
Exclude non-cash impairment charges $ - $ 0.54 $ - $ 0.54
Income per diluted share on a non-GAAP $ 0.24 $ 0.13 $ 0.29 $ 0.75
basis *
*Income per diluted share excluding the amounts shown above is a non-GAAP measure. The Company believes this is an important measure since it represents the income per diluted share from operations excluding the restructuring and non-cash impairment charges.
Conference Call Information
The Company's conference call to review fourth quarter fiscal 2009 results will be broadcast live over the internet today, Thursday, February 18, 2010 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 enhanced profitability (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, 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), June 30, 2009 (filed July 31, 2009) and September 30, 2009 (filed October 30, 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
December 31, 2009 December 31, 2008
Unaudited Audited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 1,797,093 $ 4,311,313
Trade receivables - net 45,831,558 60,133,493
Other receivables 1,476,643 1,394,235
Inventories 55,420,467 70,302,174
Deferred income taxes 1,475,695 2,167,966
Income tax receivable - 75,481
Prepaid expenses 1,309,138 1,455,158
Total current assets 107,310,594 139,839,820
FIXED ASSETS - net 22,669,876 23,549,319
IDENTIFIED INTANGIBLES & GOODWILL 30,516,910 31,020,478
OTHER ASSETS 2,892,683 2,452,501
TOTAL ASSETS $ 163,390,063 $ 196,862,118
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable $ 6,781,534 $ 9,869,948
Current maturities - long term debt 511,870 480,723
Accrued expenses:
Taxes - other 440,223 641,670
Income tax payable 26,242 -
Other 5,226,749 4,261,689
Total current liabilities 12,986,618 15,254,030
LONG TERM DEBT - less current maturities 55,079,776 87,258,939
DEFERRED INCOME TAXES 9,071,639 9,438,921
DEFERRED LIABILITIES 3,774,356 3,960,472
TOTAL LIABILITIES 80,912,389 115,912,362
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and
outstanding
December 31, 2009 - 5,576,465; December 54,598,104 54,250,064
31, 2008 -
5,516,898
Accumulated other comprehensive loss (3,217,144 ) (3,222,215 )
Retained earnings 31,096,714 29,921,907
Total shareholders' equity 82,477,674 80,949,756
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 163,390,063 $ 196,862,118
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
December 31, December 31,
2009 2008 2009 2008
Unaudited Unaudited Unaudited Audited
NET SALES $ 61,659,962 $ 66,045,405 $ 229,485,575 $ 259,538,145
COST OF GOODS 39,628,552 41,234,024 144,928,219 157,294,936
SOLD
GROSS MARGIN 22,031,410 24,811,381 84,557,356 102,243,209
OPERATING
EXPENSES
Selling,
general and 18,430,127 21,598,071 75,072,208 87,496,049
administrative
expenses
Restructuring 711,169 - 711,169 -
charges
Non-cash
intangible - 4,862,514 - 4,862,514
impairment
charges
Total
operating 19,141,296 26,460,585 75,783,377 92,358,563
expenses
INCOME/(LOSS)
FROM 2,890,114 (1,649,204 ) 8,773,979 9,884,646
OPERATIONS
OTHER INCOME
AND
(EXPENSES):
Interest (1,834,608 ) (2,217,217 ) (7,500,513 ) (9,318,454 )
expense
Other - net 319,957 (58,103 ) 577,856 (26,718 )
Total other - (1,514,651 ) (2,275,320 ) (6,922,657 ) (9,345,172 )
net
INCOME/(LOSS)
BEFORE INCOME 1,375,463 (3,924,524 ) 1,851,322 539,474
TAXES
INCOME TAX
EXPENSE/ 465,997 (1,683,665 ) 676,515 (627,665 )
(BENEFIT)
NET INCOME/ $ 909,466 $ (2,240,859 ) $ 1,174,807 $ 1,167,139
(LOSS)
NET INCOME/
(LOSS) PER
SHARE
Basic $ 0.16 $ (0.41) $ 0.21 $ 0.21
Diluted $ 0.16 $ (0.41) $ 0.21 $ 0.21
WEIGHTED
AVERAGE NUMBER
OF
COMMON SHARES
OUTSTANDING
Basic 5,564,408 5,509,691 5,551,382 5,508,614
Diluted 5,592,446 5,509,691 5,551,382 5,513,430
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