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Rocky Brands Inc.$23.85$2.8513.57%

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 Rocky Brands, Inc. Announces Fourth Quarter and Fiscal 2016 Results
   Thursday, February 16, 2017 4:05:01 PM ET

--Funded Debt Decreased 38.5% Year-Over-Year to $14.6 Million

Rocky Brands, Inc. (RCKY ) today announced financial results for its fourth quarter and year ended December 31, 2016.

Fourth Quarter 2016 Sales and Income

Fourth quarter net sales increased 2.6% to $67.0 million versus net sales of $65.3 million in the fourth quarter of 2015. The Company reported a fourth quarter net loss of $0.6 million, or ($0.09) per diluted share, compared to fourth quarter net income of $1.4 million, or $0.18 per diluted share in the year ago period. The fourth quarter of 2016 included a non-cash impairment charge related to the Creative Recreation brand of $3.0 million. Excluding this charge, fourth quarter 2016 net income was $1.3 million, or $0.18 per diluted share. (See below for a reconciliation of fourth quarter 2016 income per diluted share on a GAAP basis to a non-GAAP basis).

Fiscal Year 2016 Sales and Income

For fiscal year 2016, net sales decreased 3.4% to $260.3 million versus net sales of $269.3 million in fiscal year 2015. The Company reported a net loss of $2.1 million, or ($0.29) per diluted share, for fiscal year 2016, compared with net income of $6.6 million, or $0.87 per diluted share, for fiscal 2015. Excluding the $1.2 million reorganizational charge the company recorded in the third quarter 2016 and the aforementioned non-cash impairment charge related to the Creative Recreation brand, fiscal 2016 net income was $0.6 million, or $0.08 per diluted share. (See below for a reconciliation of fiscal year 2016 income per diluted share on a GAAP basis to a non-GAAP basis).

Mike Brooks, Chief Executive Officer, commented, "The fundamentals of our business continued to improve in the fourth quarter following a difficult start to 2016. While our full year results were disappointing, we’ve taken a number of actions that we believe will improve our earnings power going forward. These include reorganizing our sales teams and reducing headcount in order to lower our expense structure. We also improved the efficiency of our expanded domestic manufacturing facility which allows us to more profitably capitalize on the growing demand for military footwear. In addition, we recently signed a licensing agreement for the Creative Recreation brand in Europe that will help enhance our overall margins. As 2017 gets underway, I’m confident that the changes we’ve made to our operating strategies and leadership team in response to the challenges of the past 12-months have made us a stronger organization and better positions Rocky Brands to return greater value to its shareholders over the long-term."

Fourth Quarter Review

Net sales for the fourth quarter increased 2.6% to $67.0 million compared to $65.3 million a year ago. Wholesale sales for the fourth quarter decreased 8.9% to $42.4 million compared to $46.5 million for the same period in 2015. Retail sales for the fourth quarter were $13.7 million compared to $13.5 million for the same period last year. Military segment sales for the fourth quarter increased 106.4% to $10.9 million compared to $5.3 million in the fourth quarter of 2015.

Gross margin in the fourth quarter of 2016 was $21.8 million, or 32.5% of sales, compared to $22.2 million, or 33.9% of sales, for the same period last year. The 140 basis point decrease was driven by the higher percentage of military sales which carry lower gross margins than wholesale and retail.

Selling, general and administrative (SG&A) expenses were $19.9 million compared to $20.2 million a year ago. The $0.3 million decrease in SG&A expenses was due primarily to lower compensation and lower advertising expenses, offset primarily by a $1.8 million increase in bad debt expense compared to a year ago. As a percent of sales, SG&A decreased 120 basis points to 29.8% of net sales compared to 31.0% sales last year.

Income from operations, excluding the aforementioned non-cash impairment charge, was $1.8 million, or 2.8% of net sales, compared to $1.9 million, or 3.0% of net sales a year ago.

Interest expense was $157,000, compared to $167,000 for the fourth quarter of 2015.

The Company’s funded debt decreased 38.5% or $9.1 million to $14.6 million at December 31, 2016 versus $23.7 million at December 31, 2015.

Inventory decreased 10.2%, or $7.8 million, to $69.2 million at December 31, 2016 compared with $77.0 million on the same date a year ago.

Conference Call Information

The Company’s conference call to review fourth quarter and fiscal 2016 results will be broadcast live over the internet today, Thursday, February 16, 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(R), Georgia Boot(R), Durango(R), Lehigh(R), Creative Recreation(R), and the licensed brand Michelin(R).

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. 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, 2015 (filed March 3, 2016) and quarterly reports on Form 10-Q for the periods ended March 31, 2016 (filed April 29, 2016), June 30, 2016 (filed July 28, 2016), and September 30, 2016 (filed October 28, 2016). 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, 2016                  December 31, 2015
                                                                                                  Unaudited                                              Audited
                                                                                      ---------------------------------                     ---------------------------------
ASSETS:
                                                                                                                                             
CURRENT ASSETS:
   Cash and cash equivalents                                                                             $   4,480,505                                         $   3,407,140
   Trade receivables - net                                                                     40,844,583                                            44,549,207
   Other receivables                                                                                           688,251                                               583,479
   Inventories                                                                                              69,168,442                                            76,991,059
   Income tax receivable                                                                                     1,243,678                                               128,699
   Deferred income taxes                                                                                     1,633,353                                             1,031,818
   Prepaid expenses                                                                       2,354,107                          2,530,517
                                                                                      -------------------- -----------                      -------------------- -----------
      Total current assets                                                                                 120,412,919                                           129,221,919
FIXED ASSETS - net                                                                             26,511,493                                            27,836,527
IDENTIFIED INTANGIBLES                                                                                      33,415,694                                            36,547,873
OTHER ASSETS                                                                                232,509                            258,812
                                                                                      -------------------- -----------                      -------------------- -----------
TOTAL ASSETS                                                                                             $ 180,572,615                                         $ 193,865,131
                                                                                      ==================== ===========                      ==================== ===========
                                                                                                                                             
                                                                                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY:
CURRENT LIABILITIES:
   Accounts payable                                                                                      $  11,589,040                                         $   9,118,555
   Accrued expenses:
   Taxes - other                                                                                               842,325                                               533,220
   Other                                                                                  5,288,546                          5,096,441
                                                                                      -------------------- -----------                      -------------------- -----------
      Total current liabilities                                                                             17,719,911                                            14,748,216
                                                                                                                                             
LONG TERM DEBT                                                                                              14,584,008                                            23,700,089
DEFERRED INCOME TAXES                                                                                       12,999,153                                            13,000,609
DEFERRED LIABILITIES                                                                        176,219                            295,676
                                                                                      -------------------- -----------                      -------------------- -----------
                                                                                                                                             
TOTAL LIABILITIES                                                                                           45,479,291                                            51,744,590
                                                                                                                                             
SHAREHOLDERS’ EQUITY:
Common stock, no par value;
                                                                                                            69,291,637                                            70,882,392
   25,000,000 shares authorized; issued and outstanding December
   31,
   2016 - 7,421,455; December 31, 2015 - 7,567,271
                                                                                                                                             
Retained earnings                                                                        65,801,687                         71,238,149
                                                                                      -------------------- -----------                      -------------------- -----------
                                                                                                                                             
      Total shareholders’ equity                                                        135,093,324                        142,120,541
                                                                                      -------------------- -----------                      -------------------- -----------
                                                                                                                                             
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                               $ 180,572,615                                         $ 193,865,131
                                                                                      ==================== ===========                      ==================== ===========
                                                                                                                                             
 
                                                                                                                                                          Rocky Brands, Inc. and Subsidiaries
                                                                                                                                                                       Condensed
                                                                                                                                                         Consolidated Statements of Operations
 
                                                                                                     Three Months Ended                                                                                                                    Year Ended
                                                                                                                           December 31,                                                                                                                                         December 31,
                                                                  ------------------------------------------------------------------------------------------------------------------------                            --------------------------------------------------------------------------------------------------------------------------
                                                                                          2016                                                   2015                                                                       2016                                                    2015
                                                                  -----------------------------------------------------                     -----------------------------------------------------                     ------------------------------------------------------                     ------------------------------------------------------
                                                                                        Unaudited                                                                  Audited                                                                   Unaudited                                                                   Audited
NET SALES                                                                            $ 66,950,298                                                              $ 65,266,028                                                              $ 260,258,584                                                              $ 269,302,023
                                                                                                                                                                                                                                                                                                  
COST OF GOODS SOLD                                                  45,160,120                          43,111,609                          183,528,494                          180,410,184  
                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                                                                                  
GROSS MARGIN                                                                           21,790,178                                                                22,154,419                                                                 76,730,090                                                                 88,891,839
                                                                                                                                                                                                                                                                                                  
OPERATING EXPENSES
Selling, general and administrative expenses                                           19,946,312                                                                20,221,612                                                                 75,631,490                                                                 78,402,079
Reorganizational charge                                                                         -                                                                         -                                                                  1,159,527                                                                          -
Impairment charge                                                    3,000,000                                   -                            3,000,000                                    -  
                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
      Total operating expenses                                                         22,946,312                                                                20,221,612                                                                 79,791,017                                                                 78,402,079
                                                                                                                                                                                                                                                                                                  
INCOME (LOSS) FROM OPERATIONS                                                          (1,156,134 )                                                               1,932,807                                                                 (3,060,927 )                                                               10,489,760
                                                                                                                                                                                                                                                                                                  
OTHER INCOME AND (EXPENSES):
   Interest expense                                                                      (157,336 )                                                                (167,152 )                                                                 (616,567 )                                                                 (696,827 )
   Other - net                                            (23,857 )                                               (8,732 )                                                59,020                             (105,433 )
                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
      Total other - net                                                                  (181,193 )                                                                (175,884 )                                                                 (557,547 )                                                                 (802,260 )
                                                                                                                                                                                                                                                                                                  
INCOME (LOSS) BEFORE INCOME TAXES                                                      (1,337,327 )                                                               1,756,923                                                                 (3,618,474 )                                                                9,687,500
                                                                                                                                                                                                                                                                                                  
INCOME TAX EXPENSE (BENEFIT)                                          (703,078 )                                              374,053                           (1,479,078 )                                             3,084,343  
                                                                  -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                                                                                  
NET INCOME (LOSS)                                                                    $   (634,249 )                                                            $  1,382,870                                           $  (2,139,396 )                                                            $   6,603,157  
                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================                      ==================== =========== ====================
                                                                                                                                                                                                                                                                                                  
INCOME PER SHARE
   Basic                                                                             $      (0.09 )                                                            $       0.18                                                              $       (0.29 )                                                            $        0.87
   Diluted                                                                           $      (0.09 )                                                            $       0.18                                                              $       (0.29 )                                                            $        0.87
                                                                                                                                                                                                                                                                                                  
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
   Basic                                                             7,427,520                           7,567,239                            7,505,219                            7,563,205  
                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================                      ==================== =========== ====================
   Diluted                                                           7,427,520                           7,578,190                            7,505,219                            7,574,172  
                                                                  ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================                      ==================== =========== ====================
                                                                                                                                                                                                                                                                                                  
 
Reconciliation of Income per Diluted Share on a GAAP Basis to a
Non-GAAP Basis
                                                                                                                                                                                                
                                                                                                                                                                                                                                                                              
                                                                                                                                                                                 Three Months Ended December 31, 2016
                                                                                                                                                                                              (Unaudited)
                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          GAAP Basis                                                  Reorganizational                                                  Impairment                                                                 Non GAAP
                                                                                                                                                           Charge                                                         Charge                                                                     Basis
                                                                     --------------------------------------------------                        -----------------------------                       --------------------------------------------------                        --------------------------------------------------
NET SALES                                                                               $ 66,950,298                                                              $         -                                         $          -                                                              $ 66,950,298
                                                                                                                                                                                                                                                                              
COST OF GOODS SOLD                                                     45,160,120                                  -                                 -                          45,160,120  
                                                                     -------------------- ---------- --------------------                      -------------------- ---------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                              
GROSS MARGIN                                                                              21,790,178                                                                        -                                                    -                                                                21,790,178
                                                                                                                                                                                                                                                                              
OPERATING EXPENSES
   Selling, general and administrative expenses                                           19,946,312                                                                        -                                                    -                                                                19,946,312
   Reorganizational charge                                                                         -                                                                        -                                                    -                                                                         -
   Impairment charge                                                    3,000,000                                  -                         3,000,000                                   -  
                                                                     -------------------- ---------- --------------------                      -------------------- ---------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
      Total operating expenses                                                            22,946,312                                                                        -                                            3,000,000                                                                19,946,312
                                                                                                                                                                                                                                                                              
INCOME (LOSS) FROM OPERATIONS                                                             (1,156,134 )                                                                      -                                           (3,000,000 )                                                               1,843,866
                                                                                                                                                                                                                                                                              
OTHER INCOME AND (EXPENSES):
      Interest expense                                                                      (157,336 )                                                                      -                                                    -                                                                  (157,336 )
      Other - net                                            (23,857 )                                                   -                                 -                             (23,857 )
                                                                     -------------------- ---------- --------------------                      -------------------- ---------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
         Total other - net                                                                  (181,193 )                                                                      -                                                    -                                                                  (181,193 )
                                                                                                                                                                                                                                                                              
INCOME (LOSS) BEFORE INCOME TAXES                                                         (1,337,327 )                                                                      -                                           (3,000,000 )                                                               1,662,673
                                                                                                                                                                                                                                                                              
INCOME TAX (BENEFIT) EXPENSE                                             (703,078 )                                                   -                        (1,050,000 )                                              346,922  
                                                                     -------------------- ---------- --------------------                      -------------------- ---------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                              
NET INCOME (LOSS)                                                                       $   (634,249 )                                                            $         -                                         $ (1,950,000 )                                                            $  1,315,751  
                                                                     ==================== ========== ====================                      ==================== =========                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                              
INCOME PER DILUTED SHARE                                                                $      (0.09 )                                                            $         -                                         $      (0.26 )                                                            $       0.18
                                                                                                                                                                                                                                                                              
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
   Basic                                                                7,427,520                          7,427,520                         7,427,520                           7,427,520  
                                                                     ==================== ========== ====================                      ==================== =========                      ==================== ========== ====================                      ==================== ========== ====================
   Diluted                                                              7,427,520                          7,427,520                         7,437,888                           7,437,888  
                                                                     ==================== ========== ====================                      ==================== =========                      ==================== ========== ====================                      ==================== ========== ====================
                                                                                                                                                                                                                                                                              
 
Reconciliation of Income per Diluted Share on a GAAP Basis to a
Non-GAAP Basis
                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                             Twelve Months Ended December 31, 2016
                                                                                                                                                                                                          (Unaudited)
                                                                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           GAAP Basis                                                             Reorganizational                                                             Impairment                                                                  Non GAAP
                                                                                                                                                                       Charge                                                                    Charge                                                                      Basis
                                                                     ---------------------------------------------------                        --------------------------------------------------                        --------------------------------------------------                        ---------------------------------------------------
NET SALES                                                                               $ 260,258,584                                                              $          -                                                              $          -                                                              $ 260,258,584
                                                                                                                                                                                                                                                                                                     
COST OF GOODS SOLD                                                     183,528,494                                   -                                   -                          183,528,494  
                                                                     -------------------- ----------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                                                                                     
GROSS MARGIN                                                                               76,730,090                                                                         -                                                                         -                                                                 76,730,090
                                                                                                                                                                                                                                                                                                     
OPERATING EXPENSES
   Selling, general and administrative expenses                                            75,631,490                                                                         -                                                                         -                                                                 75,631,490
   Reorganizational charge                                                                  1,159,527                                                                 1,159,527                                                                         -                                                                          -
   Impairment charge                                                     3,000,000                                   -                           3,000,000                                    -  
                                                                     -------------------- ----------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------
      Total operating expenses                                                             79,791,017                                                                 1,159,527                                                                 3,000,000                                                                 75,631,490
                                                                                                                                                                                                                                                                                                     
INCOME (LOSS) FROM OPERATIONS                                                              (3,060,927 )                                                              (1,159,527 )                                                              (3,000,000 )                                                                1,098,600
                                                                                                                                                                                                                                                                                                     
OTHER INCOME AND (EXPENSES):
      Interest expense                                                                       (616,567 )                                                                       -                                                                         -                                                                   (616,567 )
      Other - net                                              59,020                                   -                                   -                               59,020  
                                                                     -------------------- ----------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------
         Total other - net                                                                   (557,547 )                                                                       -                                                                         -                                                                   (557,547 )
                                                                                                                                                                                                                                                                                                     
INCOME (LOSS) BEFORE INCOME TAXES                                                          (3,618,474 )                                                              (1,159,527 )                                                              (3,000,000 )                                                                  541,053
                                                                                                                                                                                                                                                                                                     
INCOME TAX (BENEFIT) EXPENSE                                            (1,479,078 )                                             (405,834 )                                           (1,050,000 )                                               (23,244 )
                                                                     -------------------- ----------- --------------------                      -------------------- ---------- --------------------                      -------------------- ---------- --------------------                      -------------------- ----------- --------------------
                                                                                                                                                                                                                                                                                                     
NET INCOME (LOSS)                                                                       $  (2,139,396 )                                                            $   (753,693 )                                                            $ (1,950,000 )                                                            $     564,297  
                                                                     ==================== =========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================
                                                                                                                                                                                                                                                                                                     
INCOME PER DILUTED SHARE                                                                $       (0.29 )                                                            $      (0.10 )                                                            $      (0.26 )                                                            $        0.08
                                                                                                                                                                                                                                                                                                     
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
   Basic                                                                 7,505,219                           7,505,219                           7,505,219                            7,505,219  
                                                                     ==================== =========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================
   Diluted                                                               7,505,219                           7,519,414                           7,519,414                            7,519,414  
                                                                     ==================== =========== ====================                      ==================== ========== ====================                      ==================== ========== ====================                      ==================== =========== ====================
                                                                                                                                                                                                                                                                                                     

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170216006019r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170216006019/en/

SOURCE: Rocky Brands, Inc.

ROCKY BRANDS, INC. 
Mike Brooks, 740-753-1951 
Chief Executive Officer 
or 
Investor Relations: 
ICR, Inc. 
Brendon Frey, 203-682-8200


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