Rocky Brands, Inc. Announces Second Quarter 2014 Results
Second Quarter Net Sales Increased 16% to a Record $68.8 Million
NELSONVILLE, Ohio--(BUSINESS WIRE)-- Rocky Brands, Inc. (RCKY) today announced financial results for its second quarter ended June 30, 2014.
Second Quarter 2014 Sales and Income
Second quarter net sales increased 15.8% to $68.8 million versus net sales of $59.4 million in the second quarter of 2013. The Company reported second quarter net income of $1.5 million, or $0.20 per diluted share compared with net income of $1.8 million, or $0.24 per diluted share in the second quarter of 2013.
David Sharp, President and Chief Executive Officer, commented, The investments weve made towards growing our brands and overall business continue to fuel record top-line results. For the second consecutive quarter each of our major wholesale categories, Work, Western, and Hunting, generated double digit sales increases on a percentage basis while the momentum in our commercial military and duty businesses accelerated following a solid start to the year. As we move into the back half of 2014, we believe we can continue to drive growth through compelling and innovative product introductions and begin delivering improved profitability through gross margin expansion and increased operating expense leverage. Our plans include capitalizing on the opportunities we believe exist for Creative Recreation within the broader casual footwear market. We are pleased with our recent accomplishments and look forward to building on our success in the quarters and years ahead.
Second Quarter Review
Net sales for the second quarter increased 15.8% to $68.8 million compared to $59.4 million a year ago. Wholesale sales for the second quarter increased 23.7% to $56.7 million compared to $45.8 million for the same period in 2013. This included a 16.8% increase in wholesale sales of the Companys legacy brands. Retail sales for the second quarter increased to $10.1 million compared to $9.8 million for the same period last year. Military segment sales for the second quarter decreased to $2.0 million compared to $3.8 million in the second quarter of 2013.
Gross margin in the second quarter of 2014 was $22.6 million, or 32.8% of sales, compared to $20.3 million, or 34.2% of sales, for the same period last year. The 140 basis point decrease was driven by the combination of lower wholesale margins due primarily to costs associated with the seeding program with a key retail partner we announced in the first quarter of 2014 and lower retail gross margin than a year ago resulting from the completed transition to a web based retail platform which carries lower gross margin and lower operating expenses compared to the previous mobile store structure.
Selling, general and administrative (SG&A) expenses were $20.0 million, or 29.1% of net sales, for the second quarter of 2014 compared to $17.4 million, or 29.4% of net sales, a year ago. The $2.6 million increase in SG&A expenses was due largely to the additional expenses associated with the Creative Recreation brand, which was acquired in December 2013, and higher compensation expense related to a new mid-year bonus program that wasnt in place a year ago. The 30 basis point improvement in SG&A as a percent of net sales was driven by leveraging expenses on higher sales.
Income from operations was $2.5 million, or 3.7% of net sales, compared to $2.9 million, or 4.8% of net sales, a year ago.
Interest expense was $0.2 million for the second quarter of 2014, versus $0.1 million for the same period last year.
The Companys funded debt was $43.4 million at June 30, 2014 versus $31.4 million at June 30, 2013. The majority of the increase was related to additional borrowings to fund the acquisition of Creative Recreation in the fourth quarter of 2013.
Inventory increased 6.5%, or $5.3 million, to $86.4 million at June 30, 2014 compared with $81.2 million on the same date a year ago. Inventory at June 30, 2014 included approximately $2.8 million associated with the acquisition of Creative Recreation. Based on current sales trends and the fall order book, the Company remains comfortable with its current inventory position.
Conference Call Information
The Companys conference call to review second quarter 2014 results will be broadcast live over the internet today, Wednesday, July 23, 2014 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 sales and profitability (paragraph 3) and inventory (paragraph 10). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Companys business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Companys annual report on Form 10-K for the year ended December 31, 2013 (filed March 6, 2014) and quarterly report on Form 10-Q for the quarter ended March 31, 2014 (filed May 1, 2014). One or more of these factors have affected historical results, and could in the future affect the Companys 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
|June 30, 2014||December 31, 2013||June 30, 2013|
|Cash and cash equivalents||$||3,960,134||$||4,215,617||$||2,855,524|
|Trade receivables net||54,088,664||49,069,668||46,429,928|
|Income tax receivable||7,039||242,228||270,878|
|Deferred income taxes||1,104,050||1,104,050||1,252,030|
|Total current assets||149,010,685||135,658,528||135,327,330|
|FIXED ASSETS net||27,641,771||26,205,080||24,418,143|
|LIABILITIES AND SHAREHOLDERS' EQUITY:|
|Taxes - other||539,919||901,116||793,439|
|Total current liabilities||26,246,589||17,416,439||20,018,568|
|LONG TERM DEBT||43,359,640||38,388,198||31,438,173|
|DEFERRED INCOME TAXES||11,750,718||11,750,718||11,148,333|
|Common stock, no par value;|
25,000,000 shares authorized; issued and outstanding June 30, 2014 - 7,543,210; December 31, 2013 - 7,536,448; June 30, 2013 - 7,516,448
|Total shareholders' equity||132,091,858||131,213,497||127,718,895|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||213,742,628||$||199,024,758||$||190,579,875|
Rocky Brands, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|COST OF GOODS SOLD||46,236,858||39,109,264||90,166,993||74,153,970|
|SELLING, GENERAL AND|
|INCOME FROM OPERATIONS||2,544,379||2,868,751||3,881,989||4,375,339|
|OTHER INCOME AND (EXPENSES):|
|Total other - net||(218,918||)||(142,471||)||(443,740||)||(276,963||)|
|INCOME BEFORE INCOME TAXES||2,325,461||2,726,280||3,438,249||4,098,376|
|INCOME TAX EXPENSE||814,000||954,000||1,203,000||1,434,000|
|INCOME PER SHARE|
|WEIGHTED AVERAGE NUMBER OF|
|COMMON SHARES OUTSTANDING|
Rocky Brands, Inc.
Jim McDonald, 740-753-1951
Chief Financial Officer
Brendon Frey, 203-682-8200
Source: Rocky Brands, Inc.Copyright Business Wire 2014