Sales Increased 28.2% to a Fourth Quarter Record $78.9 Million
Diluted Earnings Per Share Increased 145.8% to a Fourth Quarter Record $0.59
NELSONVILLE, Ohio, February 12, 2015 – Rocky Brands, Inc. (NASDAQ: RCKY) today announced financial results for its fourth quarter and year ended December 31, 2014.
Fourth Quarter 2014 Sales and Income
Fourth quarter net sales increased 28.2% to a record $78.9 million versus net sales of $61.6 million in the fourth quarter of 2013. The Company reported record fourth quarter net income of $4.5 million, or $0.59 per diluted share as compared to net income of $1.8 million, or $0.24 per diluted share in the fourth quarter of 2013. Excluding all expenses and income related to Creative Recreation, fourth quarter 2013 net income was $2.2 million, or $0.29 per diluted share. (See below for a reconciliation of fourth quarter 2013 income per diluted share on a GAAP basis to a non-GAAP basis).
Fiscal Year 2014 Sales and Income
For fiscal year 2014, net sales increased 16.9% to $286.2 million versus net sales of $244.9 million in fiscal year 2013. The Company reported net income of $9.8 million, or $1.30 per diluted share, for fiscal year 2014, compared with net income of $7.4 million, or $0.98 per diluted share, for fiscal 2013. Excluding the aforementioned expenses and income related to Creative Recreation, fiscal year 2013 net income was $7.9 million, or $1.04 per diluted share. (See below for a reconciliation of fiscal year 2013 income per diluted share on a GAAP basis to a non-GAAP basis).
David Sharp, President and Chief Executive Officer, commented, “Our record fourth quarter performance represents a great finish to a strong year for our company. Sales growth accelerated to its highest level of 2014 in the fourth quarter fueled by consumer demand for our compelling collections of Work, Western, Hunting and Commercial Military footwear. At the same time, Creative Recreation has started to become a more meaningful contributor to our profitability following the work we’ve done to improve the brand’s supply chain.”
“Our fourth quarter and full year results demonstrate the earnings power of our business model. We were able to increase profitability at a faster rate than sales by leveraging the leaner, more efficient operating expense structure we’ve put in place,” continued Mr. Sharp. “We are confident that the combination of our product and marketing strategies, diverse portfolio of authentic brands, and our strong retail relationships, provides us with continued growth opportunities in 2015 and beyond.”
Fourth Quarter Review
Net sales for the fourth quarter increased 28.2% to $78.9 million compared to $61.6 million a year ago. Wholesale sales for the fourth quarter increased 30.0% to $62.0 million including $3.3 million in Creative Recreation branded sales as compared to $47.7 million for the same period in 2013. Retail sales for the fourth quarter increased 6.6% to $13.7 million compared to $12.9 million for the same period last year. Military segment sales for the fourth quarter increased to $3.2 million compared to $1.0 million in the fourth quarter of 2013.
Gross margin in the fourth quarter of 2014 was $27.6 million, or 35.0% of sales, compared to $21.8 million, or 35.4% of sales, for the same period last year. The 40 basis point decrease was driven by higher military sales which carry lower gross margins than wholesale and retail.
Selling, general and administrative (SG&A) expenses were $20.7 million compared to $18.5 million a year ago. The $2.2 million increase in SG&A expenses was due to higher compensation expense, higher variable expenses associated with the increase in sales and additional expenses associated with the Creative Recreation brand, which was acquired in December 2013. As a percent of sales, SG&A improved 330 basis points to 26.2% of net sales compared to 29.9% sales last year.
Income from operations was $7.0 million, or 8.8% of net sales, compared to $3.4 million, or 5.6% of net sales a year ago which excludes expenses associated with the acquisition of Creative Recreation.
Interest expense was $0.2 million for the fourth quarter of 2014 and 2013.
The Company’s funded debt was $36.3 million at December 31, 2014 versus $38.4 million at December 31, 2013.
Inventory increased 9.0%, or $7.1 million, to $85.2 million at December 31, 2014 compared with $78.2 million on the same date a year ago.
Conference Call Information
The Company’s conference call to review fourth quarter 2014 results will be broadcast live over the internet today, Thursday, February 12, 2015 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®, Lehigh®, Creative Recreation®, and the licensed brand Michelin®.
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 growth opportunities (paragraph 4). 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, 2013 (filed March 6, 2014) and quarterly reports on Form 10-Q for the quarters ended March 31, 2014 (filed May 1, 2014), June 30, 2014 (filed July 30, 2014), and September 30, 2014 (filed October 29, 2014). 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.