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Forum List » Business News and Headlines SEC Filings, Earing Reports, Press Releases  
Rocky Brands Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: July 29, 2011 11:48AM
Rocky Brands Inc. (RCKY) filed Quarterly Report for the period ended 2011-06-30. Highlight of Business Operations:Net sales. Net sales for the three months ended June 30, 2011 were $52.3 million compared to $55.2 million for the same period in 2010. Wholesale sales for the three months ended June 30, 2011 were $40.8 million compared to $38.5 million for the same period in 2010. The $2.3 million increase in wholesale sales was the result of a $2.4 million or 50.2% increase in our duty footwear category, a $1.0 million or 17.0% increase in our western footwear category, a $0.9 million or 107.5% increase in apparel and accessories, a $0.2 million or 3.0% increase in our outdoor footwear category and a $0.1 million increase in other, which were partially offset by a $0.5 million or 2.8% decrease in our work footwear category (excluding Dickies) and a $1.8 million decline of our Dickies licensed business. Our licensing agreement with Dickies expired on December 31, 2010. Retail sales for the three months ended June 30, 2011 were $10.9 million compared to $11.0 million for the same period in 2010. Military segment sales for the three months ended June 30, 2011, were $0.6 million, compared to $5.7 million in the same period in 2010. From time to time, we bid on military contracts when they become available. Our sales under such contracts are dependent on us winning the bids for these contracts. Gross margin. Gross margin for the three months ended June 30, 2011 was $20.6 million, or 39.4% of net sales, compared to $19.1 million, or 34.6% of net sales, in the same period last year. Wholesale gross margin for the three months ended June 30, 2011 was $15.5 million, or 37.9% of net sales, compared to $13.5 million, or 35.0% of net sales, in the same period last year. The 290 basis point increase was primarily the result of higher average selling prices and reduced manufacturing costs in our manufacturing facilities, which included a $0.6 million refund of labor cost under a labor incentive agreement in Puerto Rico. Retail gross margin for the three months ended June 30, 2011 was $5.1 million, or 46.7% of net sales, compared to $4.9 million, or 44.2% of net sales, for the same period in 2010. The 250 basis point increase was primarily the result of higher average selling prices. Military gross margin for the three months ended June 30, 2011 was $0.1 million, or 13.0% of net sales, compared to $0.7 million, or 13.1% of net sales, for the same period in 2010. Interest expense. Interest expense was $0.3 million in the three months ended June 30, 2011, compared to $2.1 million for the same period in the prior year which included one-time fees of approximately $0.9 million associated with the early repayment of a portion of our senior term note. The remaining decrease is primarily the result of the repayment of a $40.0 million term note carrying interest at a rate of 11.5%. This repayment was made with $14 million of proceeds from our May 2010 equity offering as well as $26 million of borrowings from our line of credit which generally carries an interest rate of LIBOR plus 150 basis points. The interest expense for the three months ended June 30, 2011 included $0.1 million of prepayment penalties and other fees from early repayment of our mortgage loans in April 2011. Net sales. Net sales for the six months ended June 30, 2011 were $104.6 million compared to $111.3 million for the same period in 2010. Wholesale sales for the six months ended June 30, 2011 were $80.6 million compared to $76.4 million for the same period in 2010. The $4.2 million increase in wholesale sales was the result of a $5.5 million or 56.3% increase in our duty footwear category, a $0.9 million or 2.4% increase in our work footwear category (excluding Dickies), a $0.9 million or 57.4% increase in sales of apparel and accessories, a $0.5 million or 6.5% increase in our outdoor footwear category and $0.1 million increase in other, which were partially offset by a $3.5 million decline of our Dickies licensed business and a $0.2 million or 1.8% decrease in our western footwear category. Our licensing agreement with Dickies expired on December 31, 2010. Retail sales for the six months ended June 30, 2011 were $22.6 million compared to $23.9 million for the same period in 2010. The $1.3 million decrease in retail sales resulted from our ongoing transition to more internet driven transactions and the decision to remove a portion of our Lehigh mobile stores from operations to help lower operating expenses. Military segment sales for the six months ended June 30, 2011, were $1.4 million, compared to $11.0 million in the same period in 2010. From time to time, we bid on military contracts when they become available. Our sales under such contracts are dependent on us winning the bids for these contracts. Gross margin. Gross margin for the six months ended June 30, 2011 was $39.9 million, or 38.1% of net sales, compared to $37.9 million, or 34.0% of net sales, in the same period last year. Wholesale gross margin for the six months ended June 30, 2011 was $28.8 million, or 35.7% of net sales, compared to $25.7 million, or 33.6% of net sales, in the same period last year. The 210 basis point increase was primarily the result of higher average selling prices as well as reduced manufacturing costs in our manufacturing facilities. Retail gross margin for the six months ended June 30, 2011 was $10.9 million, or 48.2% of net sales, compared to $10.8 million, or 45.0% of net sales, for the same period in 2010. The 320 basis point increase was primarily the result of higher average selling prices. Military gross margin for the six months ended June 30, 2011 was $0.2 million, or 13.1% of net sales, compared $1.4 million, or 13.0% of net sales, for the same period in 2010. Financing Activities. Cash provided by financing activities for the six months ended June 30, 2011 was $4.8 million and reflects a net increase in the borrowing under the revolving credit facility of $6.4 million, partially offset by repayments on long-term debt of $2.0 million. Cash used in financing activities for the six months ended June 30, 2010 was $4.6 million and reflects $14.1 million of proceeds from the aforementioned issuance of common stock, an increase in net borrowings under the revolving credit facility of $10.6 million and repayments on long-term debt of $29.3 million.
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