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Rocky Brands, Inc. Announces Third Quarter Fiscal 2010 Results

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  Published in House and Home on Thursday, October 21st 2010 at 13:13 GMT by Market Wire
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NELSONVILLE, Ohio--([ BUSINESS WIRE ])--Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its third quarter ended September 30, 2010.

For the third quarter of 2010, net sales increased 12.3% to $74.8 million versus net sales of $66.6 million in the third quarter of 2009. Net income for the third quarter of 2010 increased $1.9 million to $4.7 million, or $0.63 per diluted share versus net income of $2.8 million, or $0.50 per diluted share a year ago.

Mike Brooks, Chairman and Chief Executive Officer, commented, aDuring the third quarter we continued to experience positive business trends similar to the first six months of 2010 which allowed us once again deliver improved profitability versus the year ago period. This included higher sales levels in both our wholesales and military segments, a 40 basis point increase in wholesale gross margin, and better operating expense leverage. We are particularly pleased with our wholesale growth which is being driven by demand for our work footwear. We also recently secured a new credit facility that will further reduce our interest expense approximately $2 million next year and free up capital to expand our business. Looking ahead, we are excited about both our near and long-term growth prospects and we are confident we have the right pieces in place to capitalize on the many opportunities still in front of us.a

Third Quarter Review

Net sales for the third quarter increased 12.3% to $74.8 million compared to $66.6 million a year ago. Wholesale sales for the third quarter increased 9.0% to $59.4 million compared to $54.5 million for the same period in 2009. The increase was driven primarily by growth of our work category. Retail sales for the third quarter were $11.1 million compared to $11.5 million for the same period last year. Military segment sales for the third quarter increased to $4.3 million versus $0.6 million for the same period in 2009.

Gross margin in the third quarter of 2010 was $27.2 million, or 36.4% of sales compared to $24.7 million, or 37.1% for the same period last year. The 70 basis point decline in gross margin was due to an increase in sales to the Military which carry lower gross margin than the wholesale and retail businesses.

Selling, general and administrative (SG&A) expenses were $19.2 million, or 25.6% of sales for the third quarter of 2010 compared to $18.6 million, or 27.9% of sales a year ago. The increase in SG&A expenses is primarily due to additional selling expenses and incentive accruals, which were partially offset by decreases in other expenses.

Income from operations increased 31.1% to $8.0 million, or 10.7% of net sales for the period compared to operating income of $6.1 million, or 9.2% of net sales in the prior year.

Interest expense decreased $1.0 million, or 50.0% to $1.0 million for the third quarter of 2010. The decrease is the result of debt reductions over the past 12 months combined with lower interest rates compared to the same period last year.

The Companya™s funded debt decreased $30.0 million, or 36.0% to $53.4 million at September 30, 2010 versus $83.4 million at September 30, 2009.

Inventory decreased 7.6% to $62.9 million at September 30, 2010 compared with $68.1 million on the same date a year ago.

Conference Call Information

The Companya™s conference call to review third quarter fiscal 2010 results will be broadcast live over the internet today, Thursday, October 21, 2010 at 4:30 pm Eastern Time. The broadcast will be hosted at [ 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®, and the licensed brands Michelin® and Mossy Oak®.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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 future growth prospects (paragraph 3). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Companya™s business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Companya™s annual report on Form 10-K for the year ended December 31, 2009 (filed March 2, 2010) and the Companya™s quarterly reports on Form 10-Q for the quarters ended March 31, 2010 (filed May 3, 2010) and June 30, 2010 (filed August 3, 2010). One or more of these factors have affected historical results, and could in the future affect the Companya™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.