Earnings Per Share Increased Fivefold to
$0.30
Adjusted Earnings Per Share Increased to
$0.39
Funded Debt Decreased 62.5% to $11.6
Million
Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial
results for the three and nine month periods ended September 30,
2017.
Sales & Income
Review
Third quarter net sales were $64.7 million compared to $73.2
million in the third quarter of 2016. The Company reported third
quarter net income of $2.2 million, or $0.30 per diluted share
compared to net income of $0.4 million, or $0.06 per diluted share
in the third quarter of 2016. Adjusted net income for the third
quarter of 2017 was $2.8 million, or $0.39 per diluted share
compared to adjusted net income of $1.2 million, or $0.16 per
diluted share in the prior year period.
Net sales for the first nine months of 2017 were $186.2 million
compared to $193.3 million for the first nine months of 2016. The
Company reported net income of $5.2 million, or $0.70 per diluted
share compared to a net loss of $1.5 million, or ($0.20) per
diluted share for the nine months ended September 30, 2017 and
2016, respectively. Adjusted net income for the first nine months
of 2017 was $5.8 million, or $0.79 per diluted share compared to an
adjusted net loss of $0.8 million, or ($0.10) per diluted share in
the prior year period.
Jason Brooks, President and Chief Executive Officer, commented,
“We are pleased to have achieved another quarter of strong earnings
growth. Our ability to drive enhanced profitability despite softer
top-line trends highlights our improved operating structure and
focus on increasing margins. As we previously announced,
approximately $1.7 million of military footwear shipments shifted
from the third quarter to the fourth quarter due to the temporary
shutdown of our Puerto Rico facility in the wake of Hurricane
Maria. On top of this, wholesale sales were below expectations as
each of our brands posted modest shortfalls versus plan. We believe
this was due to a combination of factors including lower
discounting as we’ve placed a greater emphasis on full-price
selling and retailers buying closer to the holiday season compared
with previous years. We were able to offset a portion of these
challenges through the expansion of our direct channel as we
continue to sign new accounts to our Lehigh Outfitters CustomFit
program. Looking ahead, we are cautiously optimistic about our
growth prospects beginning in the fourth quarter as wholesale sales
trends have recently accelerated and our military manufacturing has
resumed normal operations. We remain confident that our current
strategies have the Company well positioned to deliver increased
value to shareholders over the long-term.”
Third Quarter Review
Net sales for the third quarter decreased 11.7% to $64.7 million
compared to $73.2 million a year ago. Wholesale sales for the third
quarter decreased 12.9% to $46.0 million compared to $52.9 million
for the same period in 2016. Retail sales for the third quarter
increased 7.8% to $11.1 million compared to $10.3 million for the
same period last year. Military segment sales for the third quarter
were $7.6 million compared to $10.1 million in the third quarter of
2016.
Gross margin in the third quarter of 2017 was $19.5 million, or
30.2% of sales, compared to $19.8 million, or 27.0% of sales, for
the same period last year. The 320 basis point increase was driven
by a significant improvement in both wholesale segment and military
segment margins. Third quarter 2017 gross margin includes
approximately $1 million of additional expenses related to payroll
and overhead costs that could not be capitalized in inventory due
to lower than usual production volumes at the Company’s Puerto Rico
manufacturing facility because of the disruption from Hurricanes
Maria and Irma. Excluding the additional expenses, adjusted gross
margin was 31.7%.
Selling, general and administrative (SG&A) expenses
decreased to $16.0 million, or 24.8% of net sales, for the third
quarter of 2017 compared to $18.9 million, or 25.8% of net sales, a
year ago. Third quarter 2016 SG&A expenses included an
approximately $1.2 million charge related to reorganizational
activities. Excluding the charge, the $1.7 million decrease in
SG&A expenses was primarily related to lower compensation
expense following the workforce reductions in the second half of
2016.
Income from operations for the quarter was $3.5 million, or 5.4%
of net sales compared to income from operations of $0.9 million, or
1.2% of net sales a year ago.
Interest expense was $110,000 for the third quarter of 2017,
versus $181,000 for the same period last year.
During the third quarter 2017, the company repurchased 48,616
shares of its common stock at an average price of $13.35.
The Company’s funded debt decreased $19.3 million, or 62.5% to
$11.6 million at September 30, 2017 versus $31.0 million at
September 30, 2016.
Inventory at September 30, 2017 decreased 3.8% to $76.9 million
compared to $79.9 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 selling, general, and administrative expenses,”
“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 third quarter 2017
results will be broadcast live over the internet today, Tuesday,
October 24, 2017 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®, Creative Recreation®, 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 growth
prospects and delivery of increased value to shareholders
(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, 2016 (filed March 9, 2017) and quarterly report
on Form 10-Q for the quarters ended March 31, 2017 (filed May 5,
2017) and June 30, 2017 (filed August 9, 2017). 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 September 30,
2017 December 31, 2016 September 30, 2016 Unaudited Audited
Unaudited ASSETS: CURRENT ASSETS: Cash and cash equivalents
$ 2,238,862 $ 4,480,505 $ 3,942,209 Trade receivables – net
45,106,205 40,844,583 51,292,323 Other receivables 800,322 688,251
579,976 Inventories 76,885,153 69,168,442 79,922,305 Income tax
receivable - 1,243,678 1,190,702 Prepaid expenses 2,431,996
2,354,107 2,644,102
Total current assets
127,462,538 118,779,566 139,571,617 FIXED ASSETS – net 24,742,833
26,511,493 27,450,150 IDENTIFIED INTANGIBLES 33,319,334 33,415,694
36,448,490 OTHER ASSETS 225,310 232,509
238,251 TOTAL ASSETS $ 185,750,015 $ 178,939,262 $ 203,708,508
LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT
LIABILITIES: Accounts payable $ 16,861,274 $ 11,589,040 $
15,042,805 Accrued other expenses: 9,097,184
6,130,871 8,604,611
Total current liabilities
25,958,458 17,719,911 23,647,416 LONG TERM DEBT 11,630,000
14,584,008 30,972,398 DEFERRED INCOME TAXES 10,464,435 11,365,800
12,120,693 DEFERRED LIABILITIES 181,737 176,219
208,387 TOTAL LIABILITIES 48,234,630 43,845,938
66,948,894 SHAREHOLDERS' EQUITY: Common stock, no par value;
25,000,000 shares authorized; issued and
outstandingSeptember 30, 2017 - 7,403,195; December 31, 2016
-7,421,455; September 30, 2016 - 7,447,331
68,979,376 69,291,637 69,507,320 Retained earnings
68,536,009 65,801,687 67,252,294
Total shareholders' equity
137,515,385 135,093,324 136,759,614
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 185,750,015 $
178,939,262 $ 203,708,508
Rocky Brands,
Inc. and Subsidiaries Condensed Consolidated Statements of
Operations Three Months Ended Nine Months Ended
September 30, September 30, 2017 2016 2017 2016
Unaudited Unaudited Unaudited Unaudited NET SALES $
64,675,082 $ 73,218,247 $ 186,202,989 $ 193,308,286 COST OF
GOODS SOLD 45,163,539 53,452,487
128,779,845 138,368,374 GROSS MARGIN
19,511,543 19,765,760 57,423,144 54,939,912
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
16,026,654 17,745,691 49,313,498 55,685,180 REORGANIZATIONAL CHARGE
- 1,159,527 -
1,159,527 TOTAL OPERATING EXPENSE 16,026,654 18,905,218
49,313,498 56,844,707 INCOME (LOSS) FROM OPERATIONS
3,484,889 860,542 8,109,646 (1,904,795 ) OTHER INCOME AND
(EXPENSES): Interest expense (110,335 ) (181,040 ) (280,824 )
(459,231 ) Other – net 12,208 (3,873 )
35,064 82,876 Total other - net (98,127 )
(184,913 ) (245,760 ) (376,355 ) INCOME (LOSS) BEFORE INCOME
TAXES 3,386,762 675,629 7,863,886 (2,281,150 ) INCOME TAX
EXPENSE (BENEFIT) 1,152,000 230,000
2,674,000 (776,000 ) NET INCOME (LOSS)
$ 2,234,762 $ 445,629 $ 5,189,886 $ (1,505,150
) INCOME (LOSS) PER SHARE Basic $ 0.30 $ 0.06 $ 0.70 $ (0.20
) Diluted $ 0.30 $ 0.06 $ 0.70 $ (0.20 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING
Basic 7,357,000 7,480,733
7,411,000 7,531,308 Diluted 7,362,088
7,504,521 7,414,317
7,531,308
Rocky
Brands, Inc. and Subsidiaries Reconciliation of Gross
Margin, Selling General Admin, Net Income (Loss) Three
months ended Nine months ended September 30, September 30, 2017
2016 2017 2016
Gross
Margin
Gross margin, as reported $ 19,511,543 $ 19,765,760 $ 57,423,144 $
54,939,912 Add: hurricane related expenses 963,570 -
963,570 - Adjusted gross margin $ 20,475,113 $
19,765,760 $ 58,386,714 $ 54,939,912
Operating
Expenses
Sales, general, and administrative, as reported $ 16,026,654 $
18,905,218 $ 49,313,498 $ 56,844,707 Less: reorganizational charge
- 1,159,527 - 1,159,527 Adjusted
selling, general, and administrative expenses $ 16,026,654 $
17,745,691 $ 49,313,498 $ 55,685,180
Net Income
(Loss)
Net income (loss), as reported $ 2,234,762 $ 445,629 $ 5,189,886 $
(1,505,150 ) Add: hurricane related expenses, after tax 635,956 -
635,956 - Add: reorganizational charge, after tax -
753,693 - 753,693 Adjusted net income (loss) $
2,870,718 $ 1,199,322 $ 5,825,842 $ (751,457 ) Net income
(loss) per share, as reported Basic $ 0.30 $ 0.06 $ 0.70 $ (0.20 )
Diluted $ 0.30 $ 0.06 $ 0.70 $ (0.20 ) Adjusted net income
(loss) per share Basic $ 0.39 $ 0.16 $ 0.79 $ (0.10 ) Diluted $
0.39 $ 0.16 $ 0.79 $ (0.10 ) Weighted average shares
outstanding Basic 7,357,000 7,480,733
7,411,000 7,531,308 Diluted 7,362,088
7,504,521 7,414,317 7,531,308
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171024006499/en/
Rocky Brands, Inc.Tom Robertson, 740-753-1951Chief Financial
OfficerorInvestor Relations:ICR, Inc.Brendon Frey, 203-682-8200
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