Rocky Brands Inc. on Wednesday announced net income of $3.2 million for its second quarter ended June 30, up from $2.6 million, while diluted earnings per share increased 20 percent to 42 cents a share, topping analysts’ expectations by 6 cents.

Q2 revenue of $62 million was up 6.4 percent from $58.2 million in the second quarter of 2018 and ahead of Wall Street’s estimates by $1.6 million.

Net sales for the first six months of 2019 increased 6.9 percent to $127.9 million compared with $119.6 million for the first six months of 2018. The company reported net income of $6.8 million, or $0.91 per diluted share and net income of $5.9 million, or $0.79 per diluted share for the six months ended June 30, 2019 and 2018, respectively.

Jason Brooks, president and CEO, said, “We delivered another quarter of very solid results highlighted by year-over-year sales increases in all three of our segments and a nice improvement in overall profitability. Our top-line performance was driven by twenty-plus percent growth in our retail division as our Lehigh CustomFit model gained further traction with existing and new accounts. At the same time, the combination of compelling products, impactful marketing programs and enhanced retailer support fueled gains in our wholesale business including our work, western, outdoor and domestic commercial military categories. Equally important, we’ve bolstered our internal manufacturing capabilities which is driving improved efficiencies and increased margins while also providing the Company with alternative sourcing options in the event of a tariff increase on footwear imports from China. I am confident that we are well positioned to capitalize on the growth prospects we believe exist across our business and continue generating increased value for our shareholders in the near and long-term.”

Second Quarter Review

Net sales for the second quarter increased 6.4 percent to $62 million compared to $58.2 million a year ago. Wholesale sales for the second quarter increased 2.1 percent to $40.6 million compared to $39.8 million for the same period in 2018. Retail sales for the second quarter increased 20.2 percent to $14.1 million compared to $11.7 million for the same period last year. Military segment sales for the second quarter increased by 8.4 percent to $7.2 million compared to $6.7 million in the second quarter of 2018.

Gross margin in the second quarter of 2019 increased to $21.4 million, or 34.6 percent of sales, compared to $19.5 million, or 33.6 percent of sales, for the same period last year. The 100 basis point increase was driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales combined with higher wholesale and military margins.

Operating expenses were $17.5 million, or 28.2 percent of net sales, for the second quarter of 2019 compared to $16.2 million, or 27.8 percent of net sales, a year ago. The increase in operating expenses was attributable to higher variable expenses associated with the growth in retail sales.

Income from operations for the second quarter of 2019 was $3.9 million, or 6.4 percent of net sales compared to $3.4 million for the same period a year ago, or 5.8 percent of net sales.

Balance Sheet Review

Cash and cash equivalents increased $7.4 million or 88.7 percent to $15.7 million at June 30, 2019 compared to $8.3 million on the same date a year ago.

Inventory at June 30, 2019, increased 6.6 percent to $77.5 million compared to $72.6 million on the same date a year ago.

Photo courtesy Rocky Brands Inc.