Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Rocky Brands, Inc. Announces Second Quarter 2024 Results By: Rocky Brands, Inc. via Business Wire July 30, 2024 at 16:05 PM EDT Net Sales of $98.3 Million; Net Loss Per Share of $0.17; Adjusted Net Income Per Share of $0.17 Inventories Decreased 20.0% and Total Debt Decreased 31.3% Year-Over-Year Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2024. Second Quarter 2024 Overview Net sales decreased 1.6% to $98.3 million from the year ago quarter, or increased 6.1%, excluding certain non-recurring sales from the year ago quarter Operating income increased 104.7% to $4.5 million from the year ago quarter Net loss was $1.2 million, or $0.17 per diluted share as compared to a net loss of $2.7 million or $0.37 per diluted share for the year ago quarter Adjusted net income was $1.3 million, or $0.17 per diluted share, as compared to $0.0 million or $0.00 per diluted share for the year ago quarter Inventories at June 30, 2024 decreased 20.0% year-over-year Total debt at June 30, 2024 decreased 31.3% year-over-year Jason Brooks, Chairman, President and Chief Executive Officer, commented, “We continue to effectively navigate an unpredictable consumer environment thanks to our diversified brand portfolio and recently deployed cost saving initiatives. Strong double-digit gains in sales for our Durango and XTRATUF brands in both our wholesale and e-commerce channels helped offset softness in other areas of our business and generated low-single digit year-over-year recurring sales growth. The second quarter was also highlighted by the refinancing of our debt and simplification of our capital structure which is expected to generate approximately $4.4 million in annualized savings beginning in 2025. Over the past several years, we have taken actions to improve the Company’s financial profile in order to reinvest in growth and drive increased shareholder value. We are encouraged with our recent results and look forward to delivering further growth over the near and long-term.” Second Quarter 2024 Review Second quarter net sales decreased 1.6% to $98.3 million compared with $99.8 million in the second quarter of 2023. Excluding certain non-recurring sales relating to the manufacturing of Servus product following the divestiture of the Servus brand, the change to a distributor model in Canada in November 2023, and temporarily elevated commercial military footwear sales to a single customer throughout 2023, net sales increased 6.1% in the second quarter of 2024 compared to the year ago period. Wholesale sales for the second quarter were $68.3 million, down 4.5% compared to the second quarter of 2023, or up 2.3% excluding the aforementioned non-recurring sales. Retail sales for the second quarter increased 4.1%, or 6.1% excluding the non-recurring sales related to the change in the Canada distribution model, to $26.1 million compared to the second quarter of 2023. Contract Manufacturing sales, which include contract military sales and private label programs, were $3.9 million in the second quarter of 2024 compared to $3.3 million in the prior year period, or up $2.6 million excluding the aforementioned non-recurring sales. Gross margin in the second quarter of 2024 was $38.0 million, or 38.7% of net sales, compared to $37.6 million, or 37.6% of net sales, for the same period last year. The 110-basis point increase in gross margin as a percentage of net sales was due to an increase of 200-basis points in Wholesale gross margins as well as a higher percentage of Retail net sales, which carry higher gross margins than our Wholesale and Contract Manufacturing segments. Operating expenses were $33.5 million, or 34.1% of net sales, for the second quarter of 2024 compared to $35.4 million, or 35.4% of net sales, for the same period a year ago. Excluding $0.7 million of acquisition-related amortization in the second quarter of 2024 and $1.7 million of acquisition-related amortization and restructuring costs in the second quarter of 2023, adjusted operating expenses were $32.8 million, or 33.4%, in the current year period and $33.6 million, or 33.2%, in the year ago period. Income from operations for the second quarter of 2024 was $4.5 million, or 4.6% of net sales, compared to $2.2 million, or 2.2% of net sales, for the same period a year ago. Adjusted operating income for the second quarter of 2024 was $5.2 million, or 5.3% of net sales, compared to adjusted operating income of $5.7 million, or 5.6% of net sales, a year ago. Interest expense for the second quarter of 2024 was $6.1 million, inclusive of a $2.6 million one-time term loan extinguishment charge, compared with $5.6 million a year ago. Excluding the one-time term loan extinguishment charge, interest expense for the second quarter was $3.5 million. The $2.1 million decrease was driven by lower debt levels and lower interest rates as a result of the debt refinancing completed in April 2024. The Company reported a second quarter net loss of $1.2 million, or $0.17 per diluted share, compared to a net loss of $2.7 million, or $0.37 per diluted share, in the second quarter of 2023. Adjusted net income for the second quarter of 2024 was $1.3 million, or $0.17 per diluted share, compared to $0.0 million, or $0.00 per diluted share, in the year ago period. Balance Sheet Review Cash and cash equivalents were $4.1 million at June 30, 2024 compared to $3.1 million on the same date a year ago. Inventories at June 30, 2024 were $175.0 million, down 20.0% compared to $218.3 million on the same date a year ago. Total debt, net of unamortized debt issuance costs, at June 30, 2024 was $152.4 million consisting of a $49.3 million senior term loan and $105.7 million of borrowings under the Company's $175.0 million revolving credit facility with Bank of America, N.A. Compared with June 30, 2023 and December 31, 2023, total debt at June 30, 2024 was down 31.3% and 12.0%, respectively. Conference Call Information The Company's conference call to review second quarter 2024 results will be broadcast live over the internet today, Tuesday, July 30, 2024 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 704-4453 (domestic) or (201) 389-0920 (international). The conference call will also be available to interested parties through a live webcast at www.rockybrands.com. Please visit the website and select the “Investors” link at least 15 minutes prior to the start of the call to register and download any necessary software. 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. Brands in the portfolio include Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, XTRATUF® and Ranger®. More information can be found at 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 Company's ability to effectively navigate changes in the consumer environment (Paragraph 2), anticipated annualized savings beginning in 2025 as a result of the Company's recent debt refinancing and simplified capital structure (Paragraph 2) and the Company's actions to improve its financial profile in order to reinvest in growth and to drive increased shareholder value (Paragraph 2). 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, 2023 (filed March 15, 2024) and the quarterly report on Form 10-Q for the quarter ended March 31, 2024 (filed May 9, 2024). 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 inclusion of such information should not be regarded as a representation or warranty by the Company or any other person 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 (In thousands, except share amounts) (Unaudited) June 30, December 31, June 30, 2024 2023 2023 ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 4,107 $ 4,470 $ 3,082 Trade receivables – net 62,968 77,028 72,566 Contract receivables - 927 2,990 Other receivables 427 1,933 2,225 Inventories – net 174,973 169,201 218,327 Income tax receivable 1,025 1,253 3,494 Prepaid expenses 5,659 3,361 5,522 Total current assets 249,159 258,173 308,206 LEASED ASSETS 7,367 7,809 9,362 PROPERTY, PLANT & EQUIPMENT – net 51,296 51,976 54,032 GOODWILL 47,844 47,844 47,844 IDENTIFIED INTANGIBLES – net 111,220 112,618 114,019 OTHER ASSETS 988 965 1,049 TOTAL ASSETS $ 467,874 $ 479,385 $ 534,512 LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 57,824 $ 49,840 $ 61,225 Contract liabilities - 927 2,990 Current portion of long-term debt 8,361 2,650 4,625 Accrued expenses and other liabilities 20,663 18,112 21,526 Total current liabilities 86,848 71,529 90,366 LONG-TERM DEBT 144,073 170,480 217,114 LONG-TERM TAXES PAYABLE - 169 169 LONG-TERM LEASE 4,914 5,461 6,804 DEFERRED INCOME TAXES 7,475 7,475 8,006 DEFERRED LIABILITIES 752 716 1,325 TOTAL LIABILITIES 244,062 255,830 323,784 SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; issued and outstanding June 30, 2024 - 7,444,881; December 31, 2023 - 7,412,480; June 30, 2023 - 7,354,060 73,223 71,973 70,400 Retained earnings 150,589 151,582 140,328 Total shareholders' equity 223,812 223,555 210,728 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 467,874 $ 479,385 $ 534,512 Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES $ 98,258 $ 99,822 $ 211,164 $ 210,267 COST OF GOODS SOLD 60,220 62,250 128,977 128,936 GROSS MARGIN 38,038 37,572 82,187 81,331 OPERATING EXPENSES 33,530 35,370 69,695 74,974 INCOME FROM OPERATIONS 4,508 2,202 12,492 6,357 INTEREST EXPENSE AND OTHER – net (6,131 ) (5,630 ) (10,785 ) (10,294 ) (LOSS) INCOME BEFORE INCOME TAX EXPENSE (1,623 ) (3,428 ) 1,707 (3,937 ) INCOME TAX (BENEFIT) EXPENSE (380 ) (713 ) 399 (823 ) NET (LOSS) INCOME $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) (LOSS) INCOME PER SHARE Basic $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) Diluted $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 7,429 7,354 7,423 7,350 Diluted 7,429 7,354 7,466 7,350 Rocky Brands, Inc. and Subsidiaries Reconciliation of GAAP Measures to Non-GAAP Measures (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES NET SALES, AS REPORTED $ 98,258 $ 99,822 $ 211,164 $ 210,267 ADD: RETURNS RELATING TO SUPPLIER DISPUTE - 1,542 - 1,542 ADJUSTED NET SALES $ 98,258 $ 101,364 $ 211,164 $ 211,809 COST OF GOODS SOLD COST OF GOODS SOLD, AS REPORTED $ 60,220 $ 62,250 $ 128,977 $ 128,936 LESS: SUPPLIER DISPUTE INVENTORY ADJUSTMENT - (181 ) - (181 ) ADJUSTED COST OF GOODS SOLD $ 60,220 $ 62,069 $ 128,977 $ 128,755 GROSS MARGIN GROSS MARGIN, AS REPORTED $ 38,038 $ 37,572 $ 82,187 $ 81,331 ADJUSTED GROSS MARGIN $ 38,038 $ 39,295 $ 82,187 $ 83,054 OPERATING EXPENSES OPERATING EXPENSES, AS REPORTED $ 33,530 $ 35,370 $ 69,695 $ 74,974 LESS: ACQUISITION-RELATED AMORTIZATION (692 ) (692 ) (1,384 ) (1,456 ) LESS: RESTRUCTURING COSTS - (1,034 ) - (1,034 ) ADJUSTED OPERATING EXPENSES $ 32,838 $ 33,644 $ 68,311 $ 72,484 ADJUSTED OPERATING INCOME $ 5,200 $ 5,651 $ 13,876 $ 10,570 INTEREST EXPENSE AND OTHER – net, AS REPORTED $ (6,131 ) $ (5,630 ) $ (10,785 ) $ (10,294 ) ADD: TERM LOAN FACILITY EXTINGUISHMENT COSTS 2,597 - 2,597 - LESS: GAIN ON SALE OF BUSINESS - - - (1,341 ) ADJUSTED INTEREST EXPENSE AND OTHER – net (3,534 ) (5,630 ) (8,188 ) (11,635 ) NET INCOME NET (LOSS) INCOME, AS REPORTED $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) TOTAL NON-GAAP ADJUSTMENTS 3,289 3,449 3,981 2,872 TAX IMPACT OF ADJUSTMENTS (770 ) (717 ) (931 ) (600 ) ADJUSTED NET INCOME (LOSS) $ 1,276 $ 17 $ 4,358 $ (842 ) NET (LOSS) INCOME PER SHARE, AS REPORTED BASIC $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) DILUTED $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) ADJUSTED NET INCOME (LOSS) PER SHARE BASIC $ 0.17 $ - $ 0.59 $ (0.11 ) DILUTED $ 0.17 $ - $ 0.58 $ (0.11 ) WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 7,429 7,354 7,423 7,350 DILUTED 7,429 7,354 7,466 7,350 Use of Non-GAAP Financial Measures In addition to GAAP financial measures, we present the following non-GAAP financial measures: "non-GAAP adjusted operating expenses," "non-GAAP adjusted operating income," "non-GAAP adjusted interest expense and other income/(expense) - net," "non-GAAP adjusted net income," and "non-GAAP adjusted net income per share." Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented. We believe that these non-GAAP measures are useful to management and investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. We believe they also provide a useful baseline for analyzing trends in our operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See "Reconciliation of GAAP Measures to Non-GAAP Measures" accompanying this press release. Non-GAAP adjustment or measure Definition Usefulness to management and investors Returns relating to supplier dispute Returns relating to supplier dispute consist of returns of product produced by a manufacturing supplier. We excluded these returns for calculating certain non-GAAP measures because these returns are inconsistent in size with our normal course of business and are unique to the on-going dispute with a manufacturing supplier. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate net sales trends. Supplier dispute inventory adjustment Supplier dispute inventory adjustment consists of an inventory adjustment to cost of goods sold for product produced by a manufacturing supplier. We excluded this inventory adjustment to cost of goods sold for calculating certain non-GAAP measures because this adjustment is noncustomary and is unique to the on-going dispute with a manufacturing supplier. This adjustment facilitates a useful evaluation of our current operating performance and comparison to past operating performance and provides investors with additional means to evaluate net cost of goods sold trends. Acquisition-related amortization Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as brands and customer relationships acquired in connection with the acquisition of the performance and lifestyle footwear business of Honeywell International Inc. Charges related to the amortization of these intangibles are recorded in operating expenses in our GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. We excluded amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the valuation of our acquisition. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate cost and expense trends. Restructuring Costs Restructuring costs represent severance expenses associated with headcount reductions following the integration of the acquired performance and lifestyle footwear business of Honeywell International Inc. in 2022 and the sale of Servus in 2023. We excluded restructuring costs for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Term debt extinguishment costs Term debt extinguishment costs relate to the loss incurred on the extinguishment of debt during the second quarter 2024. The prepayment penalty associated with the early termination of the term debt, as well as the accelerated amortization of deferred financing fees of the term debt, was recorded as expense within Interest Expense and Other - net accompanying unaudited condensed consolidated financial statements. We excluded this cost for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. This adjustment is a one-time cost for refinancing the term debt and is not reoccurring. This adjustment facilitates a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Gain on sale of business Gain on sale of business relates to the sale of the brand Servus. This includes the disposal of non-financial assets and corresponding expenses relating to the sale of the brand along with assets held at our Rock Island manufacturing facility. We excluded the disposition of non-financial assets and related expenses for purposes of calculating certain non-GAAP measures because the gain does not accurately reflect our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate cost trends. View source version on businesswire.com: https://www.businesswire.com/news/home/20240730790533/en/Contacts Company Contact: Tom Robertson Chief Operating Officer, Chief Financial Officer and Treasurer (740) 753-9100 Investor Relations: Brendon Frey ICR, Inc. (203) 682-8200 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Rocky Brands, Inc. Announces Second Quarter 2024 Results By: Rocky Brands, Inc. via Business Wire July 30, 2024 at 16:05 PM EDT Net Sales of $98.3 Million; Net Loss Per Share of $0.17; Adjusted Net Income Per Share of $0.17 Inventories Decreased 20.0% and Total Debt Decreased 31.3% Year-Over-Year Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2024. Second Quarter 2024 Overview Net sales decreased 1.6% to $98.3 million from the year ago quarter, or increased 6.1%, excluding certain non-recurring sales from the year ago quarter Operating income increased 104.7% to $4.5 million from the year ago quarter Net loss was $1.2 million, or $0.17 per diluted share as compared to a net loss of $2.7 million or $0.37 per diluted share for the year ago quarter Adjusted net income was $1.3 million, or $0.17 per diluted share, as compared to $0.0 million or $0.00 per diluted share for the year ago quarter Inventories at June 30, 2024 decreased 20.0% year-over-year Total debt at June 30, 2024 decreased 31.3% year-over-year Jason Brooks, Chairman, President and Chief Executive Officer, commented, “We continue to effectively navigate an unpredictable consumer environment thanks to our diversified brand portfolio and recently deployed cost saving initiatives. Strong double-digit gains in sales for our Durango and XTRATUF brands in both our wholesale and e-commerce channels helped offset softness in other areas of our business and generated low-single digit year-over-year recurring sales growth. The second quarter was also highlighted by the refinancing of our debt and simplification of our capital structure which is expected to generate approximately $4.4 million in annualized savings beginning in 2025. Over the past several years, we have taken actions to improve the Company’s financial profile in order to reinvest in growth and drive increased shareholder value. We are encouraged with our recent results and look forward to delivering further growth over the near and long-term.” Second Quarter 2024 Review Second quarter net sales decreased 1.6% to $98.3 million compared with $99.8 million in the second quarter of 2023. Excluding certain non-recurring sales relating to the manufacturing of Servus product following the divestiture of the Servus brand, the change to a distributor model in Canada in November 2023, and temporarily elevated commercial military footwear sales to a single customer throughout 2023, net sales increased 6.1% in the second quarter of 2024 compared to the year ago period. Wholesale sales for the second quarter were $68.3 million, down 4.5% compared to the second quarter of 2023, or up 2.3% excluding the aforementioned non-recurring sales. Retail sales for the second quarter increased 4.1%, or 6.1% excluding the non-recurring sales related to the change in the Canada distribution model, to $26.1 million compared to the second quarter of 2023. Contract Manufacturing sales, which include contract military sales and private label programs, were $3.9 million in the second quarter of 2024 compared to $3.3 million in the prior year period, or up $2.6 million excluding the aforementioned non-recurring sales. Gross margin in the second quarter of 2024 was $38.0 million, or 38.7% of net sales, compared to $37.6 million, or 37.6% of net sales, for the same period last year. The 110-basis point increase in gross margin as a percentage of net sales was due to an increase of 200-basis points in Wholesale gross margins as well as a higher percentage of Retail net sales, which carry higher gross margins than our Wholesale and Contract Manufacturing segments. Operating expenses were $33.5 million, or 34.1% of net sales, for the second quarter of 2024 compared to $35.4 million, or 35.4% of net sales, for the same period a year ago. Excluding $0.7 million of acquisition-related amortization in the second quarter of 2024 and $1.7 million of acquisition-related amortization and restructuring costs in the second quarter of 2023, adjusted operating expenses were $32.8 million, or 33.4%, in the current year period and $33.6 million, or 33.2%, in the year ago period. Income from operations for the second quarter of 2024 was $4.5 million, or 4.6% of net sales, compared to $2.2 million, or 2.2% of net sales, for the same period a year ago. Adjusted operating income for the second quarter of 2024 was $5.2 million, or 5.3% of net sales, compared to adjusted operating income of $5.7 million, or 5.6% of net sales, a year ago. Interest expense for the second quarter of 2024 was $6.1 million, inclusive of a $2.6 million one-time term loan extinguishment charge, compared with $5.6 million a year ago. Excluding the one-time term loan extinguishment charge, interest expense for the second quarter was $3.5 million. The $2.1 million decrease was driven by lower debt levels and lower interest rates as a result of the debt refinancing completed in April 2024. The Company reported a second quarter net loss of $1.2 million, or $0.17 per diluted share, compared to a net loss of $2.7 million, or $0.37 per diluted share, in the second quarter of 2023. Adjusted net income for the second quarter of 2024 was $1.3 million, or $0.17 per diluted share, compared to $0.0 million, or $0.00 per diluted share, in the year ago period. Balance Sheet Review Cash and cash equivalents were $4.1 million at June 30, 2024 compared to $3.1 million on the same date a year ago. Inventories at June 30, 2024 were $175.0 million, down 20.0% compared to $218.3 million on the same date a year ago. Total debt, net of unamortized debt issuance costs, at June 30, 2024 was $152.4 million consisting of a $49.3 million senior term loan and $105.7 million of borrowings under the Company's $175.0 million revolving credit facility with Bank of America, N.A. Compared with June 30, 2023 and December 31, 2023, total debt at June 30, 2024 was down 31.3% and 12.0%, respectively. Conference Call Information The Company's conference call to review second quarter 2024 results will be broadcast live over the internet today, Tuesday, July 30, 2024 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 704-4453 (domestic) or (201) 389-0920 (international). The conference call will also be available to interested parties through a live webcast at www.rockybrands.com. Please visit the website and select the “Investors” link at least 15 minutes prior to the start of the call to register and download any necessary software. 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. Brands in the portfolio include Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, XTRATUF® and Ranger®. More information can be found at 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 Company's ability to effectively navigate changes in the consumer environment (Paragraph 2), anticipated annualized savings beginning in 2025 as a result of the Company's recent debt refinancing and simplified capital structure (Paragraph 2) and the Company's actions to improve its financial profile in order to reinvest in growth and to drive increased shareholder value (Paragraph 2). 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, 2023 (filed March 15, 2024) and the quarterly report on Form 10-Q for the quarter ended March 31, 2024 (filed May 9, 2024). 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 inclusion of such information should not be regarded as a representation or warranty by the Company or any other person 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 (In thousands, except share amounts) (Unaudited) June 30, December 31, June 30, 2024 2023 2023 ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 4,107 $ 4,470 $ 3,082 Trade receivables – net 62,968 77,028 72,566 Contract receivables - 927 2,990 Other receivables 427 1,933 2,225 Inventories – net 174,973 169,201 218,327 Income tax receivable 1,025 1,253 3,494 Prepaid expenses 5,659 3,361 5,522 Total current assets 249,159 258,173 308,206 LEASED ASSETS 7,367 7,809 9,362 PROPERTY, PLANT & EQUIPMENT – net 51,296 51,976 54,032 GOODWILL 47,844 47,844 47,844 IDENTIFIED INTANGIBLES – net 111,220 112,618 114,019 OTHER ASSETS 988 965 1,049 TOTAL ASSETS $ 467,874 $ 479,385 $ 534,512 LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 57,824 $ 49,840 $ 61,225 Contract liabilities - 927 2,990 Current portion of long-term debt 8,361 2,650 4,625 Accrued expenses and other liabilities 20,663 18,112 21,526 Total current liabilities 86,848 71,529 90,366 LONG-TERM DEBT 144,073 170,480 217,114 LONG-TERM TAXES PAYABLE - 169 169 LONG-TERM LEASE 4,914 5,461 6,804 DEFERRED INCOME TAXES 7,475 7,475 8,006 DEFERRED LIABILITIES 752 716 1,325 TOTAL LIABILITIES 244,062 255,830 323,784 SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; issued and outstanding June 30, 2024 - 7,444,881; December 31, 2023 - 7,412,480; June 30, 2023 - 7,354,060 73,223 71,973 70,400 Retained earnings 150,589 151,582 140,328 Total shareholders' equity 223,812 223,555 210,728 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 467,874 $ 479,385 $ 534,512 Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES $ 98,258 $ 99,822 $ 211,164 $ 210,267 COST OF GOODS SOLD 60,220 62,250 128,977 128,936 GROSS MARGIN 38,038 37,572 82,187 81,331 OPERATING EXPENSES 33,530 35,370 69,695 74,974 INCOME FROM OPERATIONS 4,508 2,202 12,492 6,357 INTEREST EXPENSE AND OTHER – net (6,131 ) (5,630 ) (10,785 ) (10,294 ) (LOSS) INCOME BEFORE INCOME TAX EXPENSE (1,623 ) (3,428 ) 1,707 (3,937 ) INCOME TAX (BENEFIT) EXPENSE (380 ) (713 ) 399 (823 ) NET (LOSS) INCOME $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) (LOSS) INCOME PER SHARE Basic $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) Diluted $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 7,429 7,354 7,423 7,350 Diluted 7,429 7,354 7,466 7,350 Rocky Brands, Inc. and Subsidiaries Reconciliation of GAAP Measures to Non-GAAP Measures (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES NET SALES, AS REPORTED $ 98,258 $ 99,822 $ 211,164 $ 210,267 ADD: RETURNS RELATING TO SUPPLIER DISPUTE - 1,542 - 1,542 ADJUSTED NET SALES $ 98,258 $ 101,364 $ 211,164 $ 211,809 COST OF GOODS SOLD COST OF GOODS SOLD, AS REPORTED $ 60,220 $ 62,250 $ 128,977 $ 128,936 LESS: SUPPLIER DISPUTE INVENTORY ADJUSTMENT - (181 ) - (181 ) ADJUSTED COST OF GOODS SOLD $ 60,220 $ 62,069 $ 128,977 $ 128,755 GROSS MARGIN GROSS MARGIN, AS REPORTED $ 38,038 $ 37,572 $ 82,187 $ 81,331 ADJUSTED GROSS MARGIN $ 38,038 $ 39,295 $ 82,187 $ 83,054 OPERATING EXPENSES OPERATING EXPENSES, AS REPORTED $ 33,530 $ 35,370 $ 69,695 $ 74,974 LESS: ACQUISITION-RELATED AMORTIZATION (692 ) (692 ) (1,384 ) (1,456 ) LESS: RESTRUCTURING COSTS - (1,034 ) - (1,034 ) ADJUSTED OPERATING EXPENSES $ 32,838 $ 33,644 $ 68,311 $ 72,484 ADJUSTED OPERATING INCOME $ 5,200 $ 5,651 $ 13,876 $ 10,570 INTEREST EXPENSE AND OTHER – net, AS REPORTED $ (6,131 ) $ (5,630 ) $ (10,785 ) $ (10,294 ) ADD: TERM LOAN FACILITY EXTINGUISHMENT COSTS 2,597 - 2,597 - LESS: GAIN ON SALE OF BUSINESS - - - (1,341 ) ADJUSTED INTEREST EXPENSE AND OTHER – net (3,534 ) (5,630 ) (8,188 ) (11,635 ) NET INCOME NET (LOSS) INCOME, AS REPORTED $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) TOTAL NON-GAAP ADJUSTMENTS 3,289 3,449 3,981 2,872 TAX IMPACT OF ADJUSTMENTS (770 ) (717 ) (931 ) (600 ) ADJUSTED NET INCOME (LOSS) $ 1,276 $ 17 $ 4,358 $ (842 ) NET (LOSS) INCOME PER SHARE, AS REPORTED BASIC $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) DILUTED $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) ADJUSTED NET INCOME (LOSS) PER SHARE BASIC $ 0.17 $ - $ 0.59 $ (0.11 ) DILUTED $ 0.17 $ - $ 0.58 $ (0.11 ) WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 7,429 7,354 7,423 7,350 DILUTED 7,429 7,354 7,466 7,350 Use of Non-GAAP Financial Measures In addition to GAAP financial measures, we present the following non-GAAP financial measures: "non-GAAP adjusted operating expenses," "non-GAAP adjusted operating income," "non-GAAP adjusted interest expense and other income/(expense) - net," "non-GAAP adjusted net income," and "non-GAAP adjusted net income per share." Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented. We believe that these non-GAAP measures are useful to management and investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. We believe they also provide a useful baseline for analyzing trends in our operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See "Reconciliation of GAAP Measures to Non-GAAP Measures" accompanying this press release. Non-GAAP adjustment or measure Definition Usefulness to management and investors Returns relating to supplier dispute Returns relating to supplier dispute consist of returns of product produced by a manufacturing supplier. We excluded these returns for calculating certain non-GAAP measures because these returns are inconsistent in size with our normal course of business and are unique to the on-going dispute with a manufacturing supplier. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate net sales trends. Supplier dispute inventory adjustment Supplier dispute inventory adjustment consists of an inventory adjustment to cost of goods sold for product produced by a manufacturing supplier. We excluded this inventory adjustment to cost of goods sold for calculating certain non-GAAP measures because this adjustment is noncustomary and is unique to the on-going dispute with a manufacturing supplier. This adjustment facilitates a useful evaluation of our current operating performance and comparison to past operating performance and provides investors with additional means to evaluate net cost of goods sold trends. Acquisition-related amortization Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as brands and customer relationships acquired in connection with the acquisition of the performance and lifestyle footwear business of Honeywell International Inc. Charges related to the amortization of these intangibles are recorded in operating expenses in our GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. We excluded amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the valuation of our acquisition. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate cost and expense trends. Restructuring Costs Restructuring costs represent severance expenses associated with headcount reductions following the integration of the acquired performance and lifestyle footwear business of Honeywell International Inc. in 2022 and the sale of Servus in 2023. We excluded restructuring costs for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Term debt extinguishment costs Term debt extinguishment costs relate to the loss incurred on the extinguishment of debt during the second quarter 2024. The prepayment penalty associated with the early termination of the term debt, as well as the accelerated amortization of deferred financing fees of the term debt, was recorded as expense within Interest Expense and Other - net accompanying unaudited condensed consolidated financial statements. We excluded this cost for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. This adjustment is a one-time cost for refinancing the term debt and is not reoccurring. This adjustment facilitates a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Gain on sale of business Gain on sale of business relates to the sale of the brand Servus. This includes the disposal of non-financial assets and corresponding expenses relating to the sale of the brand along with assets held at our Rock Island manufacturing facility. We excluded the disposition of non-financial assets and related expenses for purposes of calculating certain non-GAAP measures because the gain does not accurately reflect our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate cost trends. View source version on businesswire.com: https://www.businesswire.com/news/home/20240730790533/en/Contacts Company Contact: Tom Robertson Chief Operating Officer, Chief Financial Officer and Treasurer (740) 753-9100 Investor Relations: Brendon Frey ICR, Inc. (203) 682-8200
Net Sales of $98.3 Million; Net Loss Per Share of $0.17; Adjusted Net Income Per Share of $0.17 Inventories Decreased 20.0% and Total Debt Decreased 31.3% Year-Over-Year
Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its second quarter ended June 30, 2024. Second Quarter 2024 Overview Net sales decreased 1.6% to $98.3 million from the year ago quarter, or increased 6.1%, excluding certain non-recurring sales from the year ago quarter Operating income increased 104.7% to $4.5 million from the year ago quarter Net loss was $1.2 million, or $0.17 per diluted share as compared to a net loss of $2.7 million or $0.37 per diluted share for the year ago quarter Adjusted net income was $1.3 million, or $0.17 per diluted share, as compared to $0.0 million or $0.00 per diluted share for the year ago quarter Inventories at June 30, 2024 decreased 20.0% year-over-year Total debt at June 30, 2024 decreased 31.3% year-over-year Jason Brooks, Chairman, President and Chief Executive Officer, commented, “We continue to effectively navigate an unpredictable consumer environment thanks to our diversified brand portfolio and recently deployed cost saving initiatives. Strong double-digit gains in sales for our Durango and XTRATUF brands in both our wholesale and e-commerce channels helped offset softness in other areas of our business and generated low-single digit year-over-year recurring sales growth. The second quarter was also highlighted by the refinancing of our debt and simplification of our capital structure which is expected to generate approximately $4.4 million in annualized savings beginning in 2025. Over the past several years, we have taken actions to improve the Company’s financial profile in order to reinvest in growth and drive increased shareholder value. We are encouraged with our recent results and look forward to delivering further growth over the near and long-term.” Second Quarter 2024 Review Second quarter net sales decreased 1.6% to $98.3 million compared with $99.8 million in the second quarter of 2023. Excluding certain non-recurring sales relating to the manufacturing of Servus product following the divestiture of the Servus brand, the change to a distributor model in Canada in November 2023, and temporarily elevated commercial military footwear sales to a single customer throughout 2023, net sales increased 6.1% in the second quarter of 2024 compared to the year ago period. Wholesale sales for the second quarter were $68.3 million, down 4.5% compared to the second quarter of 2023, or up 2.3% excluding the aforementioned non-recurring sales. Retail sales for the second quarter increased 4.1%, or 6.1% excluding the non-recurring sales related to the change in the Canada distribution model, to $26.1 million compared to the second quarter of 2023. Contract Manufacturing sales, which include contract military sales and private label programs, were $3.9 million in the second quarter of 2024 compared to $3.3 million in the prior year period, or up $2.6 million excluding the aforementioned non-recurring sales. Gross margin in the second quarter of 2024 was $38.0 million, or 38.7% of net sales, compared to $37.6 million, or 37.6% of net sales, for the same period last year. The 110-basis point increase in gross margin as a percentage of net sales was due to an increase of 200-basis points in Wholesale gross margins as well as a higher percentage of Retail net sales, which carry higher gross margins than our Wholesale and Contract Manufacturing segments. Operating expenses were $33.5 million, or 34.1% of net sales, for the second quarter of 2024 compared to $35.4 million, or 35.4% of net sales, for the same period a year ago. Excluding $0.7 million of acquisition-related amortization in the second quarter of 2024 and $1.7 million of acquisition-related amortization and restructuring costs in the second quarter of 2023, adjusted operating expenses were $32.8 million, or 33.4%, in the current year period and $33.6 million, or 33.2%, in the year ago period. Income from operations for the second quarter of 2024 was $4.5 million, or 4.6% of net sales, compared to $2.2 million, or 2.2% of net sales, for the same period a year ago. Adjusted operating income for the second quarter of 2024 was $5.2 million, or 5.3% of net sales, compared to adjusted operating income of $5.7 million, or 5.6% of net sales, a year ago. Interest expense for the second quarter of 2024 was $6.1 million, inclusive of a $2.6 million one-time term loan extinguishment charge, compared with $5.6 million a year ago. Excluding the one-time term loan extinguishment charge, interest expense for the second quarter was $3.5 million. The $2.1 million decrease was driven by lower debt levels and lower interest rates as a result of the debt refinancing completed in April 2024. The Company reported a second quarter net loss of $1.2 million, or $0.17 per diluted share, compared to a net loss of $2.7 million, or $0.37 per diluted share, in the second quarter of 2023. Adjusted net income for the second quarter of 2024 was $1.3 million, or $0.17 per diluted share, compared to $0.0 million, or $0.00 per diluted share, in the year ago period. Balance Sheet Review Cash and cash equivalents were $4.1 million at June 30, 2024 compared to $3.1 million on the same date a year ago. Inventories at June 30, 2024 were $175.0 million, down 20.0% compared to $218.3 million on the same date a year ago. Total debt, net of unamortized debt issuance costs, at June 30, 2024 was $152.4 million consisting of a $49.3 million senior term loan and $105.7 million of borrowings under the Company's $175.0 million revolving credit facility with Bank of America, N.A. Compared with June 30, 2023 and December 31, 2023, total debt at June 30, 2024 was down 31.3% and 12.0%, respectively. Conference Call Information The Company's conference call to review second quarter 2024 results will be broadcast live over the internet today, Tuesday, July 30, 2024 at 4:30 pm Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 704-4453 (domestic) or (201) 389-0920 (international). The conference call will also be available to interested parties through a live webcast at www.rockybrands.com. Please visit the website and select the “Investors” link at least 15 minutes prior to the start of the call to register and download any necessary software. 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. Brands in the portfolio include Rocky®, Georgia Boot®, Durango®, Lehigh®, The Original Muck Boot Company®, XTRATUF® and Ranger®. More information can be found at 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 Company's ability to effectively navigate changes in the consumer environment (Paragraph 2), anticipated annualized savings beginning in 2025 as a result of the Company's recent debt refinancing and simplified capital structure (Paragraph 2) and the Company's actions to improve its financial profile in order to reinvest in growth and to drive increased shareholder value (Paragraph 2). 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, 2023 (filed March 15, 2024) and the quarterly report on Form 10-Q for the quarter ended March 31, 2024 (filed May 9, 2024). 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 inclusion of such information should not be regarded as a representation or warranty by the Company or any other person 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 (In thousands, except share amounts) (Unaudited) June 30, December 31, June 30, 2024 2023 2023 ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 4,107 $ 4,470 $ 3,082 Trade receivables – net 62,968 77,028 72,566 Contract receivables - 927 2,990 Other receivables 427 1,933 2,225 Inventories – net 174,973 169,201 218,327 Income tax receivable 1,025 1,253 3,494 Prepaid expenses 5,659 3,361 5,522 Total current assets 249,159 258,173 308,206 LEASED ASSETS 7,367 7,809 9,362 PROPERTY, PLANT & EQUIPMENT – net 51,296 51,976 54,032 GOODWILL 47,844 47,844 47,844 IDENTIFIED INTANGIBLES – net 111,220 112,618 114,019 OTHER ASSETS 988 965 1,049 TOTAL ASSETS $ 467,874 $ 479,385 $ 534,512 LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 57,824 $ 49,840 $ 61,225 Contract liabilities - 927 2,990 Current portion of long-term debt 8,361 2,650 4,625 Accrued expenses and other liabilities 20,663 18,112 21,526 Total current liabilities 86,848 71,529 90,366 LONG-TERM DEBT 144,073 170,480 217,114 LONG-TERM TAXES PAYABLE - 169 169 LONG-TERM LEASE 4,914 5,461 6,804 DEFERRED INCOME TAXES 7,475 7,475 8,006 DEFERRED LIABILITIES 752 716 1,325 TOTAL LIABILITIES 244,062 255,830 323,784 SHAREHOLDERS' EQUITY: Common stock, no par value; 25,000,000 shares authorized; issued and outstanding June 30, 2024 - 7,444,881; December 31, 2023 - 7,412,480; June 30, 2023 - 7,354,060 73,223 71,973 70,400 Retained earnings 150,589 151,582 140,328 Total shareholders' equity 223,812 223,555 210,728 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 467,874 $ 479,385 $ 534,512 Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES $ 98,258 $ 99,822 $ 211,164 $ 210,267 COST OF GOODS SOLD 60,220 62,250 128,977 128,936 GROSS MARGIN 38,038 37,572 82,187 81,331 OPERATING EXPENSES 33,530 35,370 69,695 74,974 INCOME FROM OPERATIONS 4,508 2,202 12,492 6,357 INTEREST EXPENSE AND OTHER – net (6,131 ) (5,630 ) (10,785 ) (10,294 ) (LOSS) INCOME BEFORE INCOME TAX EXPENSE (1,623 ) (3,428 ) 1,707 (3,937 ) INCOME TAX (BENEFIT) EXPENSE (380 ) (713 ) 399 (823 ) NET (LOSS) INCOME $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) (LOSS) INCOME PER SHARE Basic $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) Diluted $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 7,429 7,354 7,423 7,350 Diluted 7,429 7,354 7,466 7,350 Rocky Brands, Inc. and Subsidiaries Reconciliation of GAAP Measures to Non-GAAP Measures (In thousands, except share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 NET SALES NET SALES, AS REPORTED $ 98,258 $ 99,822 $ 211,164 $ 210,267 ADD: RETURNS RELATING TO SUPPLIER DISPUTE - 1,542 - 1,542 ADJUSTED NET SALES $ 98,258 $ 101,364 $ 211,164 $ 211,809 COST OF GOODS SOLD COST OF GOODS SOLD, AS REPORTED $ 60,220 $ 62,250 $ 128,977 $ 128,936 LESS: SUPPLIER DISPUTE INVENTORY ADJUSTMENT - (181 ) - (181 ) ADJUSTED COST OF GOODS SOLD $ 60,220 $ 62,069 $ 128,977 $ 128,755 GROSS MARGIN GROSS MARGIN, AS REPORTED $ 38,038 $ 37,572 $ 82,187 $ 81,331 ADJUSTED GROSS MARGIN $ 38,038 $ 39,295 $ 82,187 $ 83,054 OPERATING EXPENSES OPERATING EXPENSES, AS REPORTED $ 33,530 $ 35,370 $ 69,695 $ 74,974 LESS: ACQUISITION-RELATED AMORTIZATION (692 ) (692 ) (1,384 ) (1,456 ) LESS: RESTRUCTURING COSTS - (1,034 ) - (1,034 ) ADJUSTED OPERATING EXPENSES $ 32,838 $ 33,644 $ 68,311 $ 72,484 ADJUSTED OPERATING INCOME $ 5,200 $ 5,651 $ 13,876 $ 10,570 INTEREST EXPENSE AND OTHER – net, AS REPORTED $ (6,131 ) $ (5,630 ) $ (10,785 ) $ (10,294 ) ADD: TERM LOAN FACILITY EXTINGUISHMENT COSTS 2,597 - 2,597 - LESS: GAIN ON SALE OF BUSINESS - - - (1,341 ) ADJUSTED INTEREST EXPENSE AND OTHER – net (3,534 ) (5,630 ) (8,188 ) (11,635 ) NET INCOME NET (LOSS) INCOME, AS REPORTED $ (1,243 ) $ (2,715 ) $ 1,308 $ (3,114 ) TOTAL NON-GAAP ADJUSTMENTS 3,289 3,449 3,981 2,872 TAX IMPACT OF ADJUSTMENTS (770 ) (717 ) (931 ) (600 ) ADJUSTED NET INCOME (LOSS) $ 1,276 $ 17 $ 4,358 $ (842 ) NET (LOSS) INCOME PER SHARE, AS REPORTED BASIC $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) DILUTED $ (0.17 ) $ (0.37 ) $ 0.18 $ (0.42 ) ADJUSTED NET INCOME (LOSS) PER SHARE BASIC $ 0.17 $ - $ 0.59 $ (0.11 ) DILUTED $ 0.17 $ - $ 0.58 $ (0.11 ) WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 7,429 7,354 7,423 7,350 DILUTED 7,429 7,354 7,466 7,350 Use of Non-GAAP Financial Measures In addition to GAAP financial measures, we present the following non-GAAP financial measures: "non-GAAP adjusted operating expenses," "non-GAAP adjusted operating income," "non-GAAP adjusted interest expense and other income/(expense) - net," "non-GAAP adjusted net income," and "non-GAAP adjusted net income per share." Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in our consolidated financial statements in the periods presented. We believe that these non-GAAP measures are useful to management and investors and other users of our consolidated financial statements as an additional tool for evaluating operating performance. We believe they also provide a useful baseline for analyzing trends in our operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See "Reconciliation of GAAP Measures to Non-GAAP Measures" accompanying this press release. Non-GAAP adjustment or measure Definition Usefulness to management and investors Returns relating to supplier dispute Returns relating to supplier dispute consist of returns of product produced by a manufacturing supplier. We excluded these returns for calculating certain non-GAAP measures because these returns are inconsistent in size with our normal course of business and are unique to the on-going dispute with a manufacturing supplier. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate net sales trends. Supplier dispute inventory adjustment Supplier dispute inventory adjustment consists of an inventory adjustment to cost of goods sold for product produced by a manufacturing supplier. We excluded this inventory adjustment to cost of goods sold for calculating certain non-GAAP measures because this adjustment is noncustomary and is unique to the on-going dispute with a manufacturing supplier. This adjustment facilitates a useful evaluation of our current operating performance and comparison to past operating performance and provides investors with additional means to evaluate net cost of goods sold trends. Acquisition-related amortization Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as brands and customer relationships acquired in connection with the acquisition of the performance and lifestyle footwear business of Honeywell International Inc. Charges related to the amortization of these intangibles are recorded in operating expenses in our GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. We excluded amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the valuation of our acquisition. These adjustments facilitate a useful evaluation of our current operating performance and comparison to past operating performance and provide investors with additional means to evaluate cost and expense trends. Restructuring Costs Restructuring costs represent severance expenses associated with headcount reductions following the integration of the acquired performance and lifestyle footwear business of Honeywell International Inc. in 2022 and the sale of Servus in 2023. We excluded restructuring costs for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Term debt extinguishment costs Term debt extinguishment costs relate to the loss incurred on the extinguishment of debt during the second quarter 2024. The prepayment penalty associated with the early termination of the term debt, as well as the accelerated amortization of deferred financing fees of the term debt, was recorded as expense within Interest Expense and Other - net accompanying unaudited condensed consolidated financial statements. We excluded this cost for purposes of calculating non-GAAP measures because these costs do not reflect our current operating performance. This adjustment is a one-time cost for refinancing the term debt and is not reoccurring. This adjustment facilitates a useful evaluation of our current operations performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. Gain on sale of business Gain on sale of business relates to the sale of the brand Servus. This includes the disposal of non-financial assets and corresponding expenses relating to the sale of the brand along with assets held at our Rock Island manufacturing facility. We excluded the disposition of non-financial assets and related expenses for purposes of calculating certain non-GAAP measures because the gain does not accurately reflect our current operating performance and comparisons to past operating results and provide investors with additional means to evaluate cost trends. View source version on businesswire.com: https://www.businesswire.com/news/home/20240730790533/en/
Company Contact: Tom Robertson Chief Operating Officer, Chief Financial Officer and Treasurer (740) 753-9100 Investor Relations: Brendon Frey ICR, Inc. (203) 682-8200
