Rocky Brands, Inc. Announces Fourth Quarter and Fiscal 2012 Results

  Rocky Brands, Inc. Announces Fourth Quarter and Fiscal 2012 Results

                  Funded Debt Decreased 33% to $23.5 Million

    Company Announces New Order to Fulfill a Contract to the U.S. Military

Business Wire

NELSONVILLE, Ohio -- February 21, 2013

Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its
fourth quarter and fiscal year ended December 31, 2012.

Fourth Quarter 2012 Income and Sales

The Company reported fourth quarter net income of $2.5 million, or $0.34 per
diluted share compared with net income of $0.3 million, or $0.04 per diluted
share in the fourth quarter of 2011. The fourth quarter of 2011 included a
one-time, non-operational charge of $3.7 million, net of tax, associated with
the termination of its defined benefit pension plan. Excluding the charge,
fourth quarter 2011 net income was $3.9 million, or $0.52 per diluted share.
(See below for a reconciliation of fourth quarter 2011 income per diluted
share on a GAAP basis to a non-GAAP basis). Fourth quarter 2012 net sales were
$58.0 million versus net sales of $64.0 million a year ago.

Fiscal Year 2012 Income and Sales

The Company reported net income of $8.9 million, or $1.18 per diluted share,
for fiscal year 2012, compared with net income of $8.3 million, or $1.11 per
diluted share, for fiscal 2011. Excluding the aforementioned charge, fiscal
year 2011 net income was $12.0 million, or $1.60 per diluted share. (See below
for a reconciliation of fiscal year 2011 income per diluted share on a GAAP
basis to a non-GAAP basis). For fiscal year 2012, net sales were $228.3
million versus net sales of $239.6 million in fiscal year 2011.

Military Contract

The Company also announced it has received an order to fulfill a contract to
the U.S. Military to produce “Hot Weather” combat boots. The first year of the
contract includes a minimum purchase amount of $3.0 million and a maximum of
$15.0 million. Shipment of the boots is expected to begin in March 2013. The
contract includes an option for four additional years with the same terms.

David Sharp, President and Chief Executive Officer, commented, “Our fourth
quarter performance reflects the challenges facing the more weather sensitive
areas of our business as a second consecutive winter of mild temperatures
tapered demand for insulated, waterproof boots. In an effort to mitigate the
impact of weather and further diversify our operations, we’ve been developing
new product lines with good success evidenced by the increase in Durango
lifestyle and western sales which were both up 44% in 2012. Based on the
momentum of these two categories, combined with other growth vehicles,
including a private label program with one of our largest wholesale accounts
and a recently awarded military contract, we believe we are well positioned to
generate solid top-line expansion in the first half of 2013. Looking further
out, we remain confident that the adjustments we’re making to the business
will allow us to grow sales annually on a consistent basis and leverage costs
to drive improved profitability and greater shareholder value.”

Fourth Quarter Review

Net sales for the fourth quarter were $58.0 million compared to $64.0 million
a year ago. Wholesale sales for the fourth quarter were $46.0 million compared
to $51.7 million for the same period in 2011. Retail sales for the fourth
quarter increased to $12.0 million compared to $11.8 million for the same
period last year. There were no military segment sales for the fourth quarter
compared to $0.4 million in the fourth quarter of 2011.

Gross margin in the fourth quarter of 2012 was $20.7 million, or 35.7% of
sales, compared to $22.5 million, or 35.1% of sales, for the same period last
year. The 60 basis point increase was driven by higher retail gross margins
versus the year ago period.

Selling, general and administrative (SG&A) expenses were $16.8 million, or
28.9% of net sales, for the fourth quarter of 2012 compared to $16.7 million,
or 26.2% of net sales, a year ago.

Income from operations was $3.9 million, or 6.8% of net sales, compared to
$5.7 million, or 8.9% of net sales, excluding the aforementioned charge
associated with the termination of the defined benefit pension plan, in the
prior year period.

Interest expense was $0.2 million for the fourth quarter of 2012, versus $0.2
million for the same period last year.

The Company’s funded debt decreased 33.0% to $23.5 million at December 31,
2012 versus $35.0 million at December 31, 2011.

Inventory increased 3.3% to $67.2 million at December 31, 2012 compared with
$65.0 million on the same date a year ago.

Reconciliation of Income per Diluted Share on a GAAP Basis to a Non-GAAP Basis

                    Three Months Ended                             Year Ended
                      December 31, 2011                                December 31, 2011
                      GAAP        Pension Plan     Non-GAAP        GAAP           Pension Plan     Non-GAAP
                      Basis         Termination        Basis           Basis            Termination        Basis
                                                                                                             
Income before         $ 276,881     $ 5,280,998        $ 5,557,879     $ 12,034,464     $ 5,280,998        $ 17,315,462
income taxes
                                                                                                           
Income tax              3,569         (1,628,495 )       1,632,064       3,727,569        (1,628,495 )       5,356,064
expense/(benefit)
                                                                                              
Net income            $ 273,312   $ 3,652,503     $ 3,925,815     $ 8,306,895    $ 3,652,503     $ 11,959,398
                                                                                                           
Income per share      $ 0.04        $ 0.49             $ 0.52          $ 1.11           $ 0.49             $ 1.60
- Diluted
                                                                                                             

Conference Call Information

The Company’s conference call to review fourth quarter and fiscal 2012 results
will be broadcast live over the internet today, Thursday, February 21, 2013 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® and Lehigh® and the
licensed brands Michelin® and Mossy Oak®. Rocky Brands is proud to supply
footwear to the United States military. For more information, visit
www.RockyBrands.com.

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
expected shipment of boots under the contract with the U.S. Military
(paragraph 4) and sales growth and profitability (paragraph 5). 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, 2011 (filed February 28, 2012) and the Company’s
quarterly reports on Form 10-Q for the quarters ended March 31, 2012 (filed
April 25, 2012), June 30, 2012 (filed July 27, 2012 and amended August 6,
2012), and September 30, 2012 (filed and amended on October 31, 2012). 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, 2012     December 31, 2011
                                       Unaudited             Audited
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents              $   4,022,579         $   3,650,291
Trade receivables – net                    44,555,057            45,008,793
Other receivables                          575,984               946,686
Inventories                                67,196,245            65,019,048
Income tax receivable                      -                     1,164,664
Deferred income taxes                      1,252,030             1,154,040
Prepaid expenses                          2,127,726            2,561,941
Total current assets                       119,729,621           119,505,463
FIXED ASSETS – net                         24,252,465            23,557,102
IDENTIFIED INTANGIBLES                     30,498,802            30,493,107
OTHER ASSETS                              363,527              510,293
TOTAL ASSETS                           $   174,844,415       $   174,065,965
                                                             
                                                             
LIABILITIES AND SHAREHOLDERS'
EQUITY:
CURRENT LIABILITIES:
Accounts payable                       $   9,930,518         $   5,696,363
Accrued expenses:
Taxes - other                              704,064               609,992
Income tax payable                         335,210               -
Other                                     3,324,668            4,624,167
Total current liabilities                  14,294,460            10,930,522
LONG TERM DEBT                             23,461,340            35,000,000
DEFERRED INCOME TAXES                      11,148,333            10,987,395
DEFERRED LIABILITIES                      303,406              488,437
TOTAL LIABILITIES                          49,207,539            57,406,354
                                                             
SHAREHOLDERS' EQUITY:
Common stock, no par value;
                                                             
25,000,000 shares authorized;
issued and outstanding December
31, 2012 - 7,503,568; December 31,         69,694,770            69,572,270
2011 - 7,489,995
                                                             
Retained earnings                         55,942,106           47,087,341
                                                             
Total shareholders' equity                125,636,876          116,659,611
                                                             
TOTAL LIABILITIES AND                  $   174,844,415       $   174,065,965
SHAREHOLDERS' EQUITY
                                                             

                                                                      
Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations
                                                                             
                   Three Months Ended                    Year Ended
                   December 31,                          December 31,
                    2012           2011             2012              2011        
                   Unaudited          Unaudited          Unaudited           Audited
                                                                                           
NET SALES          $ 58,043,987       $ 63,989,643       $ 228,317,663       $ 239,599,096
                                                                             
COST OF GOODS       37,313,685       41,532,318       148,031,073       151,668,341 
SOLD
                                                                             
GROSS MARGIN         20,730,302         22,457,325         80,286,590          87,930,755
                                                                             
OPERATING
EXPENSES
Selling,
general and          16,799,780         16,744,251         66,679,761          69,852,696
administrative
expenses
Pension
termination         -                5,280,998        -                 5,280,998   
charges
Total
operating            16,799,780         22,025,249         66,679,761          75,133,694
expenses
                                                                             
INCOME FROM          3,930,522          432,076            13,606,829          12,797,061
OPERATIONS
                                                                             
OTHER INCOME
AND
(EXPENSES):
Interest             (183,671   )       (218,667   )       (650,873    )       (979,511    )
expense
Other – net         (11,575    )      63,472           131,463           216,914     
Total other -        (195,246   )       (155,195   )       (519,410    )       (762,597    )
net
                                                                             
INCOME BEFORE        3,735,276          276,881            13,087,419          12,034,464
INCOME TAXES
                                                                             
INCOME TAX          1,187,199        3,569            4,232,654         3,727,569   
EXPENSE
                                                                             
NET INCOME         $ 2,548,077       $ 273,312         $ 8,854,765        $ 8,306,895   
                                                                             
INCOME PER
SHARE
Basic              $ 0.34             $ 0.04             $ 1.18              $ 1.11
Diluted            $ 0.34             $ 0.04             $ 1.18              $ 1.11
                                                                             
WEIGHTED
AVERAGE NUMBER
OF
COMMON SHARES
OUTSTANDING
Basic               7,503,568        7,489,995        7,503,494         7,486,655   
Diluted             7,503,568        7,489,995        7,503,494         7,487,196   

Contact:

Rocky Brands, Inc.
Jim McDonald, 740-753-1951
Chief Financial Officer
or
Investor Relations:
ICR, Inc.
Brendon Frey, 203-682-8200
 
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