Rocky Brands Inc. reported earnings rose 9.1 percent in the first quarter on a 7.4 percent revenue gain.
Sales increased to $65.9 million compared to $61.4 million in the first quarter of 2018. The company reported first quarter net income of $3.6 million, or 48 cents per diluted share, compared to net income of $3.3 million, or 44 cents, in the first quarter of 2018.
Jason Brooks, president and chief executive officer, commented, “We are pleased to be off to a good start in 2019 with solid first quarter results that included an 18 percent increase in retail sales. Our overall performance continues to be driven by our commitment to execute the game plan we’ve outlined for the company, namely, introducing compelling products, expanding awareness and demand for our brands and direct channels, providing enhanced retailer support, and capitalizing on our production capabilities to increase sales and manufacturing efficiencies. These initiatives are fueling consistent gains in revenue, gross margins and profitability, which is allowing us to reinvest in our business and return capital to shareholders through our quarterly dividend and share repurchase plan. Looking ahead, we are cautiously optimistic about our prospects for growth over the remainder of the year and believe we are well positioned for sustained success over the long-term.”
First Quarter Review
Net sales for the first quarter increased 7.4 percent to $65.9 million compared to $61.4 million a year ago. Wholesale sales for the first quarter increased 4.8 percent to $42.4 million compared to $40.4 million for the same period in 2018. Retail sales for the first quarter increased 18.2 percent to $15.4 million compared to $13.1 million for the same period last year. Military segment sales for the first quarter were $8.1 million compared to $7.9 million in the first quarter of 2018.
Gross margin in the first quarter of 2019 increased to $23.0 million, or 34.9 percent of sales, compared to $21.0 million, or 34.2 percent of sales, for the same period last year. The 70 basis point increase was driven by higher retail and military margins combined with a lower percentage of military sales, which carry lower gross margins than wholesale and retail sales.
Operating expenses increased to $18.5 million, or 28.0 percent of net sales, for the first quarter of 2019 compared to $16.7 million, or 27.3 percent of net sales, a year ago. The increase in operating expenses was driven primarily by increased investments in marketing and personnel to support future growth as well as higher variable expenses associated with the increase in sales.
Income from operations increased to $4.5 million, or 6.8 percent of net sales compared to income from operations of $4.2 million, or 6.9 percent of net sales a year ago.
Balance Sheet Review
Cash and cash equivalents increased $7.5 million or 74.3 percent to $17.6 million at March 31, 2019 compared to $10.1 million on the same date a year ago.
Inventory at March 31, 2019 increased 7.3 percent to $69.9 million compared to $65.2 million on the same date a year ago.
Rocky Brands makes footwear and apparel marketed under names including Rocky, Georgia Boot, Durango, Lehigh and the licensed brand Michelin.