Rocky Brands Inc. on Tuesday reported fourth-quarter net income increased 41 percent to $5.1 million, or 68 cents per diluted share, from $3.6 million, or 48 cents per diluted share in the year-ago period. EPS beat Wall Street’s consensus target by 21 cents.

The company’s fourth-quarter net sales increased 12.1 percent to $75.3 million versus net sales of $67.2 million in the fourth quarter of 2018. That topped estimates by $4.3 million.

“Our fourth-quarter performance represents a fantastic finish to a record year of profitability for Rocky Brands Inc.,” said Jason Brooks, president and CEO. “Throughout 2019, we successfully executed our key initiatives, fueling strong momentum in our Rocky, Georgia Boot and Durango brands and robust growth of our retail segment. Our recent results highlight our progress as fourth-quarter retail sales increased 26 percent driven by both our Lehigh CustomFit safety shoe program and direct-to-consumer ecommerce channels, while wholesale sales improved 7 percent led by strong gains in our work, western and commercial military categories.

“The significant improvement in earnings for both the fourth quarter and full-year underscores our continued progress enhancing gross margins through segment mix, increased manufacturing efficiencies and improved full-priced selling, which has allowed us to make additional investments in people, resources and marketing programs to support sustained top-line growth. We feel good about the strategic direction the company is headed, and we are confident in our ability to continue generating increased value for our shareholders over the long-term.”

Fourth Quarter 2019 Sales and Income
Fourth-quarter net sales increased 12.1 percent to $75.3 million versus net sales of $67.2 million in the fourth quarter of 2018. Fourth-quarter net income increased 41 percent to $5.1 million, or $0.68 per diluted share, compared to $3.6 million, or $0.48 per diluted share in the year-ago period.

Fiscal Year 2019 Sales and Income
For fiscal year 2019, net sales increased 7 percent to $270.4 million versus net sales of $252.7 million in fiscal year 2018. Net income increased 20 percent to $17.5 million, or $2.35 per diluted share, for fiscal year 2019, compared with a net income of $14.6 million, or $1.95 per diluted share, for fiscal 2018. Adjusted net income for fiscal 2019 was $16.9 million, or $2.27 per diluted share, compared to an adjusted net income of $14 million, or $1.88 per diluted share in 2018.

Fourth Quarter and Full-Year Review
Wholesale sales for the fourth quarter increased 7.3 percent to $49.3 million compared to $45.9 million for the same period in 2018. Retail sales for the fourth quarter increased 26 percent to $20.8 million compared to $16.5 million for the same period last year. Military segment sales for the fourth quarter increased 10.4 percent to $5.3 million compared to $4.8 million in the fourth quarter of 2018.

Gross margin in the fourth quarter of 2019 increased 17.1 percent to $28.3 million, or 37.5 percent of sales, compared to $24.1 million, or 35.9 percent of sales, for the same period last year. The 160 basis point increase was driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales, and higher wholesale, retail and military segment margins versus the same period last year.

Operating expenses were $21.6 million, or 28.7 percent of net sales, for the fourth quarter of 2019 compared to $19.3 million, or 28.7 percent of net sales, a year ago.

Income from operations for the fourth quarter of 2019 increased 37.2 percent to $6.7 million, or 8.8 percent of net sales compared to $4.9 million for the same period a year ago, or 7.2 percent of net sales.

For 2019, wholesale sales increased 3.7 percent to $179.5 million compared to $173.1 million for 2018. Retail sales increased 21.8 percent to $64.8 million compared to $53.2 million for the same period last year. Military segment sales declined 1.1 percent to $26.1 million compared to $26.4 million in 2018.

Gross margin for 2019 increased 12.2 percent to $97.7 million, or 36.1 percent of sales, compared to $87 million, or 34.4 percent of sales, for the same period last year. The 170 basis point increase was driven by a higher percentage of retail sales, which carry higher gross margins than wholesale and military sales, and higher wholesale, retail and military segment margins versus the same period last year.

Operating expenses were $75.6 million, or 28 percent of net sales, for 2019 compared to $69 million, or 27.3 percent of net sales, a year ago.

Income from operations for 2019 increased to $22.1 million, or 8.2 percent of net sales compared to $18.1 million for the same period a year ago, or 7.1 percent of net sales.

Balance Sheet Review
Cash and cash equivalents increased $5.3 million or 52.5 percent to $15.5 million at December 31, 2019, compared to $10.2 million on the same date a year ago.

Inventory at December 31, 2019, increased 5.4 percent to $76.7 million compared to $72.8 million on the same date a year ago.

Photo courtesy Rocky Brands