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