Fourth Quarter Revenue Increased 12.1% to
$75.3 Million
Fourth Quarter Diluted Earnings Per Share
Increased 41.7% to $0.68
2019 Year-End Cash and Cash Equivalents
Increased 52.5% to $15.5 Million
Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial
results for its fourth quarter and year ended December 31,
2019.
Fourth Quarter 2019 Sales and
Income
Fourth quarter net sales increased 12.1% to $75.3 million versus
net sales of $67.2 million in the fourth quarter of 2018. Fourth
quarter net income increased 41.0% to $5.1 million, or $0.68 per
diluted share, compared to $3.6 million, or $0.48 per diluted share
in the year ago period.
Fiscal Year 2019 Sales and
Income
For fiscal year 2019, net sales increased 7.0% to $270.4 million
versus net sales of $252.7 million in fiscal year 2018. Net income
increased 20.0% to $17.5 million, or $2.35 per diluted share, for
fiscal year 2019, compared with a net income of $14.6 million, or
$1.95 per diluted share, for fiscal 2018. Adjusted net income for
fiscal 2019 was $16.9 million, or $2.27 per diluted share, compared
to an adjusted net income of $14.0 million, or $1.88 per diluted
share in 2018. (See below for a reconciliation of GAAP financial
measures to non-GAAP financial measures).
“Our fourth quarter performance represents a fantastic finish to
a record year of profitability for Rocky Brands, Inc.,” said Jason
Brooks, President and Chief Executive Officer. “Throughout 2019, we
successfully executed our key initiatives, fueling strong momentum
in our Rocky, Georgia Boot and Durango brands and robust growth of
our retail segment. Our recent results highlight our progress as
fourth quarter retail sales increased 26% driven by both our Lehigh
CustomFit safety shoe program and direct-to-consumer ecommerce
channels, while wholesale sales improved 7% led by strong gains in
our work, western and commercial military categories. The
significant improvement in earnings for both the fourth quarter and
full year underscores our continued progress enhancing gross
margins through segment mix, increased manufacturing efficiencies
and improved full priced selling, which has allowed us to make
additional investments in people, resources and marketing programs
to support sustained top-line growth. We feel good about the
strategic direction the Company is headed and we are confident in
our ability to continue generating increased value for our
shareholders over the long-term.”
Fourth Quarter and Full Year
Review
Wholesale sales for the fourth quarter increased 7.3% to $49.3
million compared to $45.9 million for the same period in 2018.
Retail sales for the fourth quarter increased 26.0% to $20.8
million compared to $16.5 million for the same period last year.
Military segment sales for the fourth quarter increased 10.4% to
$5.3 million compared to $4.8 million in the fourth quarter of
2018.
Gross margin in the fourth quarter of 2019 increased 17.1% to
$28.3 million, or 37.5% of sales, compared to $24.1 million, or
35.9% of sales, for the same period last year. The 160 basis point
increase was driven by a higher percentage of retail sales, which
carry higher gross margins than wholesale and military sales, and
higher wholesale, retail and military segment margins versus the
same period last year.
Operating expenses were $21.6 million, or 28.7% of net sales,
for the fourth quarter of 2019 compared to $19.3 million, or 28.7%
of net sales, a year ago.
Income from operations for the fourth quarter of 2019 increased
37.2% to $6.7 million, or 8.8% of net sales compared to $4.9
million for the same period a year ago, or 7.2% of net sales.
For 2019, wholesale sales increased 3.7% to $179.5 million
compared to $173.1 million for 2018. Retail sales increased 21.8%
to $64.8 million compared to $53.2 million for the same period last
year. Military segment sales declined 1.1% to $26.1 million
compared to $26.4 million in 2018.
Gross margin for 2019 increased 12.2% to $97.7 million, or 36.1%
of sales, compared to $87.0 million, or 34.4% of sales, for the
same period last year. The 170 basis point increase was driven by a
higher percentage of retail sales, which carry higher gross margins
than wholesale and military sales, and higher wholesale, retail and
military segment margins versus the same period last year.
Operating expenses were $75.6 million, or 28.0% of net sales,
for 2019 compared to $69.0 million, or 27.3% of net sales, a year
ago.
Income from operations for 2019 increased to $22.1 million, or
8.2% of net sales compared to $18.1 million for the same period a
year ago, or 7.1% of net sales.
Balance Sheet Review
Cash and cash equivalents increased $5.3 million or 52.5% to
$15.5 million at December 31, 2019 compared to $10.2 million on the
same date a year ago.
Inventory at December 31, 2019 increased 5.4% to $76.7 million
compared to $72.8 million on the same date a year ago.
Use of Non-GAAP Financial
Measures
In addition to GAAP financial measures, we present the following
non-GAAP financial measures: “non-GAAP adjusted gross margin,”
“non-GAAP adjusted operating expenses,” “non-GAAP adjusted other-
net,” “non-GAAP adjusted net income,” and “non-GAAP adjusted net
income per share.” Adjusted results exclude the impact of items
that management believes affect the comparability or underlying
business trends in our consolidated financial statements in the
periods presented. We believe that these non-GAAP measures are
useful to investors and other users of our consolidated financial
statements as an additional tool for evaluating operating
performance. We believe they also provide a useful baseline for
analyzing trends in our operations. Investors should not consider
these non-GAAP measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. See
“Reconciliation of GAAP Measures to Non-GAAP Measures” accompanying
this press release.
Conference Call
Information
The Company’s conference call to review fourth quarter 2019
results will be broadcast live over the internet today, Tuesday,
February 25, 2020 at 4:30 pm Eastern Time. The broadcast will be
hosted at http://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®, Georgia
Boot®, Durango®, Lehigh®, and the licensed brand Michelin®.
Safe Harbor Language
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 the
Company’s ability to continue generating increased value for
shareholders over the long-term (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, 2018 (filed March 13, 2019) and quarterly reports on Form 10-Q
for the quarters ended March 31, 2019 (filed May 9, 2019), June 30,
2019 (filed August 8, 2019) and September 30, 2019 (filed November
5, 2019). 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
(In thousands, except share
amounts)
December 31,
December 31,
2019
2018
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
$
15,518
$
10,173
Trade receivables, net
45,585
43,337
Contract receivables
4,746
2,602
Other receivables
366
331
Inventories – net
76,731
72,822
Income tax receivable
150
30
Prepaid expenses
3,030
1,890
Total current assets
146,126
131,185
LEASED ASSETS
1,743
-
PROPERTY, PLANT & EQUIPMENT – net
27,423
23,057
IDENTIFIED INTANGIBLES – net
30,240
30,273
OTHER ASSETS
294
148
TOTAL ASSETS
$
205,826
$
184,663
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable
$
15,776
$
13,543
Contract liabilities
4,746
2,602
Accrued expenses:
Salaries and wages
3,044
3,339
Taxes - other
967
556
Accrued freight
867
668
Commissions
608
560
Accrued duty
3,824
2,334
Other
1,702
1,416
Total current liabilities
31,534
25,018
LONG-TERM TAXES PAYABLE
169
169
LONG-TERM LEASE
1,158
-
DEFERRED INCOME TAXES
8,108
7,780
DEFERRED LIABILITIES
201
121
TOTAL LIABILITIES
41,170
33,088
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and
outstanding December 31, 2019 - 7,354,970; December 31, 2018 -
7,368,494
67,993
68,387
Retained earnings
96,663
83,188
Total shareholders' equity
164,656
151,575
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
205,826
$
184,663
Rocky Brands, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations
(In thousands, except share
amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
NET SALES
$
75,341
$
67,186
$
270,408
$
252,694
COST OF GOODS SOLD
47,089
43,054
172,723
165,665
GROSS MARGIN
28,252
24,132
97,685
87,029
OPERATING EXPENSES
21,596
19,281
75,600
68,968
INCOME FROM OPERATIONS
6,656
4,851
22,085
18,061
OTHER INCOME (EXPENSES)
(13)
(15)
146
(162)
INCOME BEFORE INCOME TAXES
6,643
4,836
22,231
17,899
INCOME TAX EXPENSE
1,557
1,229
4,769
3,346
NET INCOME
$
5,086
$
3,607
$
17,462
$
14,553
INCOME PER SHARE
Basic
$
0.69
$
0.49
$
2.36
$
1.96
Diluted
$
0.68
$
0.48
$
2.35
$
1.95
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic
7,372
7,414
7,387
7,412
Diluted
7,426
7,467
7,439
7,462
Rocky Brands, Inc. and
Subsidiaries
Reconciliation of GAAP
Measures to Non-GAAP Measures
(In thousands, except share
amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
2018
2019
2018
Gross
Margin
Gross margin, as reported
$
28,252
$
24,132
$
97,685
$
87,029
Less: Hurricane related expense
reimbursement *
-
-
(725)
-
Adjusted gross margin
$
28,252
$
24,132
$
96,960
$
87,029
Operating
Expenses
$
21,596
$
19,281
$
75,600
$
68,968
INCOME FROM OPERATIONS, ADJUSTED
$
6,656
$
4,851
$
21,360
$
18,061
Net
Income
Net income, as reported
$
5,086
$
3,607
$
17,462
$
14,553
Less: Transition Tax Adjustment **
-
-
-
(561)
Less: Hurricane related expense
reimbursement, after tax
-
-
(579)
-
Adjusted net income
$
5,086
$
3,607
$
16,883
$
13,992
Net income per share, as reported
Basic
$
0.69
$
0.49
$
2.36
$
1.96
Diluted
$
0.68
$
0.48
$
2.35
$
1.95
Adjusted net income per share
Basic
$
0.69
$
0.49
$
2.29
$
1.89
Diluted
$
0.68
$
0.48
$
2.27
$
1.88
Weighted average shares outstanding
Basic
7,372
7,414
7,387
7,412
Diluted
7,426
7,467
7,439
7,462
* Adjustment related to reimbursements of expenses associated
with the temporary closure of our Puerto Rican manufacturing
facility as a result of Hurricane Maria in 2017
** Adjustment related to the one-time transition tax on the
deemed repatriation of undistributed foreign earnings as a result
of further analysis of the provisions of the Tax Cuts and Jobs
Act.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200225005678/en/
Company: Tom Robertson Chief Financial Officer (740) 753-9100
Investor Relations: Brendon Frey ICR, Inc. (203) 682-8200
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