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Rocky Brands, Inc. Announces Second Quarter Fiscal 2011 Results

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  Published in House and Home on Tuesday, July 26th 2011 at 13:06 GMT by Market Wire
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NELSONVILLE, Ohio--([ BUSINESS WIRE ])--Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its second quarter ended June 30, 2011.

Second quarter 2011 net income improved to $2.3 million or $0.30 per diluted share versus net income of $0.5 million, or $0.08 per diluted share in the year ago period. Excluding one-time charges of $0.6 million, net of tax, associated with the early repayment of a portion of the Companya™s senior term loan, second quarter 2010 net income was $1.1 million, or $0.17 per diluted share. The earnings per share improvement was attained even with 933,000, or 14.2% more weighted average common shares outstanding as a result of the Company's follow-on common stock offering in May 2010. Gross margin improved 480 basis points to 39.4% compared to 34.6% last year. Net sales were $52.3 million for the second quarter versus net sales of $55.2 million in the second quarter of 2010, due to reduced sales under military contracts.

David Sharp, President and Chief Executive Officer, commented, aWe are very pleased to report our eighth consecutive quarter of improved profitability on a year-over-year basis. The increase in our bottom line over the past 24 months has primarily been achieved through increased operating efficiencies, higher gross margins and more recently reduction in interest expense. As a result of our stronger balance sheet and the restructuring of our retail division behind us, we are positioned to drive future earnings gains through top-line growth in our wholesale and retail segments. We continue to be confident that our portfolio of brands has the potential to expand into other categories and new markets internationally and we are pursuing strategies to capitalize on these opportunities. We will also look to take further advantage of our internal manufacturing capabilities to improve in-stock positions on popular styles, increase our speed to market, and reduce costs.a

Second Quarter Review

Net sales for the second quarter were $52.3 million compared to $55.2 million a year ago. Wholesale sales for the second quarter increased 6.0% to $40.8 million compared to $38.5 million for the same period in 2010. Retail sales for the second quarter were $10.9 million compared to $11.0 million for the same period last year. Military segment sales for the second quarter decreased $5.1 million to $0.6 million compared to $5.7 million in the same period in 2010.

Gross margin in the second quarter of 2011 was $20.6 million, or 39.4% of sales compared to $19.1 million, or 34.6% for the same period last year. The 480 basis point improvement in gross margin as a percentage of sales was primarily attributable to the decrease in sales in our military segment which carry lower gross margins than our retail and wholesale segments coupled with higher average selling prices. In addition, we benefited from a 290 basis point increase in our wholesale segment and a 250 basis point increase in our retail segment driven by higher average selling prices and improved manufacturing efficiencies.

Selling, general and administrative (SG&A) expenses were $16.9 million or 32.2% of sales, for the second quarter of 2011 compared to $16.2 million, or 29.3% of sales a year ago. The increase was primarily attributable to an increase in planned advertising expenses.

Income from operations was $3.8 million, or 7.2% of net sales, compared to 2.9 million, or 5.3% of net sales, in the prior year period.

Interest expense decreased $1.8 million to $0.3 million for the second quarter of 2011 versus $2.1 million for the same period last year which included one-time fees of approximately $0.9 million, pre-tax, associated with the early repayment of a portion of the Companya™s senior term loan. Excluding the one-time fees from a year ago, the decrease is attributable to lower interest rates as the result of the new $70 million revolving credit facility signed in October 2010.

The Companya™s funded debt was $39.5 million at June 30, 2011 versus $36.9 million at June 30, 2010.

Inventory increased 20.4% to $74.4 million at June 30, 2011 compared with $61.8 million on the same date a year ago. The increase in inventory was primarily the result of an increase in cost per unit.

Conference Call Information

The Companya™s conference call to review second quarter fiscal 2011 results will be broadcast live over the internet today, Tuesday, July 26, 2011 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 opportunities and internal manufacturing capabilities (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, 2010 (filed March 2, 2011) and the Companya™s quarterly report on Form 10-Q for the quarter ended March 31, 2011 (filed May 3, 2011). 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.