Rocky Brands, Inc. announced sales for the fourth quarter ended Dec. 31, 2010 increased 8.2% to $66.7 million versus net sales of $61.7 million in the fourth quarter of 2009. The company reported net income of $3.0 million, or 41 cents per diluted share, in the fourth quarter of 2010, versus net income of $900,000, or 16 cents per diluted share, for the fourth quarter of 2009.
For fiscal 2010, net sales increased 10.2% to $252.8 million versus net sales of $229.5 million in fiscal 2009. The company reported net income of $7.7 million, or $1.14 per diluted share, in 2010, versus net income of $1.2 million, or 21 per diluted share, in 2009.
Mike Brooks, Chairman and Chief Executive Officer, commented “We ended the year with another strong performance that exceeded internal and external expectations. Our strategic efforts to grow the top line resulted in wholesale sales being up 14% for the quarter and 8% for the full year. The consumer response to our new product introductions and brand extensions has been positive and is fueling additional demand across our account base. In addition to our sales increase, we reduced our operating expenses 5% in 2010 and more than 17% over the past two years. Lastly, we recently completed a successful recapitalization that strengthened our balance sheet and will significantly lower our interest expense going forward. These recent accomplishments have us well positioned for profitable growth in 2011 and we look forward to returning even greater value to our shareholders in the years ahead.”
Fourth Quarter Review
Net sales for the fourth quarter increased 8.2% to $66.7 million compared to $61.7 million a year ago. Wholesale sales for the fourth quarter increased 14.4% to $52.5 million compared to $45.9 million for the same period in 2009. Retail sales for the fourth quarter were $12.4 million compared to $12.5 million for the same period last year. Military segment sales for the fourth quarter were $1.8 million versus $3.3 million for the same period in 2009.
Gross margin in the fourth quarter of 2010 was $24.3 million, or 36.5% of sales compared to $22.0 million, or 35.7% for the same period last year. The 80 basis point increase is primarily due to the increase in wholesale sales which carry higher gross margins than our military segment.
Operating expenses were $19.0 million, or 28.4% of sales, for the fourth quarter of 2010 compared to $19.1 million, or 31.0% of sales, a year ago.
Income from operations increased to $5.4 million, or 8.1% of sales, for the period compared to income from operations of $2.9 million, or 4.7% sales, in the prior year.
Interest expense was $1.7 million for the fourth quarter of 2010 versus $1.8 million for the same period last year. The decrease is attributable to reduced borrowings versus a year ago combined with lower interest rates as the result of the new $70 million revolving credit facility with PNC Bank signed in October 2010. This decrease was offset by a non-cash charge of approximately $1 million associated with deferred financing costs relating to the extinguishment of the previous credit facility and term loans.
The company's funded debt decreased $20.5 million, or 36.9%, to $35.1 million at December 31, 2010 versus $55.6 million at Dec. 31, 2009. This decrease is primarily the result of proceeds from our equity offering in May 2010 and cash generated from operations.
Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Operations |
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| Three Months Ended | Years Ended | |||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
| Unaudited | Unaudited | Unaudited | Audited | |||||||||||||||||||
| NET SALES | $ | 66,729,979 | $ | 61,659,962 | $ | 252,792,263 | $ | 229,485,575 | ||||||||||||||
| COST OF GOODS SOLD | 42,397,793 | 39,628,552 | 163,419,549 | 144,928,219 | ||||||||||||||||||
| GROSS MARGIN | 24,332,186 | 22,031,410 | 89,372,714 | 84,557,356 | ||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||
| Selling, general and administrative expenses | 18,955,677 | 18,430,127 | 72,303,259 | 75,072,208 | ||||||||||||||||||
| Restructuring charges | – | 711,169 | – | 711,169 | ||||||||||||||||||
| Total operating expenses | 18,955,677 | 19,141,296 | 72,303,259 | 75,783,377 | ||||||||||||||||||
| INCOME FROM OPERATIONS | 5,376,509 | 2,890,114 | 17,069,455 | 8,773,979 | ||||||||||||||||||
| OTHER INCOME AND (EXPENSES): | ||||||||||||||||||||||
| Interest expense | (1,743,273 | ) | (1,834,608 | ) | (6,464,449 | ) | (7,500,513 | ) | ||||||||||||||
| Other � net | 365,762 | 319,957 | 652,213 | 577,856 | ||||||||||||||||||
| Total other – net | (1,377,511 | ) | (1,514,651 | ) | (5,812,236 | ) | (6,922,657 | ) | ||||||||||||||
| INCOME BEFORE INCOME TAXES | 3,998,998 | 1,375,463 | 11,257,219 | 1,851,322 | ||||||||||||||||||
| INCOME TAX EXPENSE | 960,487 | 465,997 | 3,573,487 | 676,515 | ||||||||||||||||||
| NET INCOME | $ | 3,038,511 | $ | 909,466 | $ | 7,683,732 | $ | 1,174,807 | ||||||||||||||
| INCOME PER SHARE | ||||||||||||||||||||||
| Basic | $ | 0.41 | $ | 0.16 | $ | 1.14 | $ | 0.21 | ||||||||||||||
| Diluted | $ | 0.41 | $ | 0.16 | $ | 1.14 | ||||||||||||||||
