Rocky Brands, Inc. said net sales for the fourth quarter ended Dec. 31 were $61.7 million versus net sales of $66.0 million in the fourth quarter of 2008. The company reported net income of $0.9 million, or 16 cents per diluted share in 2009 versus a net loss of $2.2 million, or 41 cents per diluted share for the fourth quarter of 2008.
Gross margin in the fourth quarter of 2009 was $22.0 million, or 35.7% of sales compared to $24.8 million, or 37.6% for the same period last year. The 190 basis point decrease is primarily due to the increase in sales in our military segment which carry lower gross margins than our retail and wholesale segments.
Selling, general and administrative (SG&A) expenses decreased $3.2 million or 14.7% to $18.4 million, or 29.9% of sales for the fourth quarter of 2009 compared to $21.6 million, or 32.7% of sales, a year ago. The decrease in SG&A expenses was primarily the result of a reduction in salaries & benefits, advertising expense, Lehigh mobile store expenses and bad debt expense.
Income from operations, excluding restructuring charges increased to $3.6 million, or 5.8% of sales for the period compared to income from operations, excluding the non-cash intangible impairment charges, of $3.2 million, or 4.9% sales in the prior year.
Interest expense decreased $0.4 million, or 17.3%, to $1.8 million for the fourth quarter of 2009 versus $2.2 million for the same period last year. The decrease is primarily the result of a reduction in average borrowings compared to the same period last year.
The company’s funded debt decreased $32.1 million, or 36.6% to $55.6 million at December 31, 2009 versus $87.7 million at December 31, 2008.
Inventory decreased $14.9 million, or 21.2%, to $55.4 million at December 31, 2009 compared with $70.3 million on the same date a year ago.
The company’s accounts receivable decreased $14.3 million, or 23.8% to $45.8 million at December 31, 2009 versus $60.1 million at December 31, 2008.The company reported Non-GAAP earnings of 24 cents per diluted share in the fourth quarter of 2009, excluding restructuring charges of 8 cents per diluted share associated with the closing of 15 mini warehouses that the company operated under its Lehigh retail division and the relocation of its customer service center to Nelsonville from Nashville compared to earnings of 13 cents per diluted share in the fourth of quarter 2008, excluding non-cash charges of 54 cents per diluted share for the write-down of the Lehigh and Gates trademarks. A reconciliation of income per diluted share on a GAAP basis to income per diluted share excluding the restructuring and non-cash impairment charges is shown below.
Mike Brooks, Chairman and Chief Executive Officer, commented “Throughout 2009 we focused on taking costs out of our business and improving the efficiency of our organization. Our efforts led to fourth quarter operating results that exceeded expectations and represented a solid ending to the year. We are very pleased with our bottom line performance compared with the year ago quarter and equally excited about the improvement in our balance sheet. Better management of our receivables and inventories allowed us to significantly reduce borrowings on our credit facility during the past 12-months and resulted in year-end debt levels down 37%. At the same time, we have made meaningful progress restructuring our retail division as well as developing innovative new product lines and brand extensions for our wholesale channels. We begin 2010 optimistic about our growth prospects and committed to leveraging our leaner operating platform to drive enhanced profitability.”
Full Year 2009 Results
For the full year 2009, net sales were $229.5 million versus net sales of $259.5 million in 2008. The company reported net income of $1.2 million, or 21 cents per diluted share in 2009, versus net income of $1.2 million, or 21 cents per diluted share in 2008.
Excluding the aforementioned charges, the company reported Non-GAAP earnings of 29 cents per diluted share for the full year of 2009 compared to earnings of 75 cents per diluted share in 2008. A reconciliation of income per diluted share on a GAAP basis to income per diluted share excluding the restructuring and non-cash impairment charges is shown below
Rocky Brands, Inc. and Subsidiaries |
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| Condensed Consolidated Statements of Operations | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Unaudited | Unaudited | Unaudited | Audited | |||||||||||||
| NET SALES | $ | 61,659,962 | $ | 66,045,405 | $ | 229,485,575 | $ | 259,538,145 | ||||||||
| COST OF GOODS SOLD | 39,628,552 | 41,234,024 | 144,928,219 | 157,294,936 | ||||||||||||
| GROSS MARGIN | 22,031,410 | 24,811,381 | 84,557,356 | 102,243,209 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling, general and administrative expenses | 18,430,127 | 21,598,071 | 75,072,208 | 87,496,049 | ||||||||||||
| Restructuring charges | 711,169 | – | 711,169 | – | ||||||||||||
| Non-cash intangible impairment charges | – | 4,862,514 | – | 4,862,514 | ||||||||||||
| Total operating expenses | 19,141,296 | 26,460,585 | 75,783,377 | 92,358,563 | ||||||||||||
| INCOME/(LOSS) FROM OPERATIONS | 2,890,114 | (1,649,204 | ) | 8,773,979 | 9,884,646 | |||||||||||
| OTHER INCOME AND (EXPENSES): | ||||||||||||||||
| Interest expense | (1,834,608 | ) | (2,217,217 | ) | (7,500,513 | ) | (9,318,454 | ) | ||||||||
| 24_4072″> Other � net | 24_5617″> 319,957 | 24_7304″> (58,103 | 24_7454″> ) | 24_9167″> 577,856 | 24_10871″> (26,718 | 24_11871″> ) | ||||||||||
| Total other – net | (1,514,651 | ) | (2,275,320 | ) | (6,922,657 | ) | (9,345,172 | ) | ||||||||
| INCOME/(LOSS) BEFORE INCOME TAXES | 1,375,463 | (3,924,524 | ) | 1,851,322 | 539,474 | |||||||||||
| INCOME TAX EXPENSE/(BENEFIT) | 465,997 | (1,683,665 | ) | 676,515 | (627,665 | ) | ||||||||||
