Rocky Brands Inc. reported first quarter net income of $3.3 million, or 44 cents per diluted share, up more than double from the company’s net income of $1.5 million, or 20 cents per diluted share, in the first quarter of 2017.
Sales for the first quarter ended March 31 were $61.4 million, down 2.7 percent compared to the first quarter of 2017.
“The new year is off to a strong start,” said Jason Brooks, president and CEO. “Our wholesale and retail divisions continue to benefit from the strategies we’ve implemented to drive improved full price selling across our core work, western and outdoor categories. At the same time, our commercial military business grew double digits over the same period last year as our domestic and international expansion plans gain further traction. The growth in commercial military sales partially offset the expected top-line headwinds from our contract military business while also helping expand gross margins through increased productivity at our company-owned manufacturing facilities. We are very pleased with our recent performance and the company’s strong financial position. That said, our sights are firmly focused on the future and on continuing to deliver enhanced profitability and greater value for our shareholders.”
Net sales for the first quarter were $61.4 million compared to $63.1 million a year ago. Wholesale sales for the first quarter increased 3.2 percent to $40.4 million compared to $39.2 million for the same period in 2017. Retail sales for the first quarter increased 10 percent to $13.1 million compared to $11.9 million for the same period last year. Military segment sales for the first quarter were $7.9 million compared to $12 million in the first quarter of 2017.
Gross margin in the first quarter of 2018 increased to $21 million, or 34.2 percent of sales, compared to $19.7 million, or 31.3 percent of sales, for the same period last year. The 290-basis-point increase was driven by higher wholesale and military margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.
Selling, general and administrative (SG&A) expenses decreased to $16.7 million, or 27.3 percent of net sales, for the first quarter of 2018 compared to $17.4 million, or 27.6 percent of net sales, a year ago. The $0.6 million decrease in SG&A expenses was primarily related to the reduction in expenses related to the Creative Recreation brand, which was sold in the fourth quarter of 2017.
Income from operations increased 78.7 percent to $4.2 million, or 6.9 percent of net sales, compared to income from operations of $2.4 million a year ago.
Interest expense was $47,000 for the first quarter of 2018, versus $90,000 for the same period last year.
Income tax expense was estimated at 20.5 percent for the first quarter of 2018, compared to 34 percent for the first quarter of 2017, due to the recently-enacted Tax Cuts and Jobs Act (TCJA).
The company had no funded debt at March 31, 2018 versus $5.2 million at March 31, 2017.
Inventory at March 31, 2018, decreased 5.3 percent to $65.2 million compared to $68.8 million on the same date a year ago