[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [ITEM 1 – FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201%20%E2%80%93%20FINANCIAL%20STATEMENTS) This section presents unaudited condensed consolidated financial statements and notes, detailing operations, accounting policies, and financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------- | :------------ | :---------------- | :------------ | | Cash and cash equivalents | $2,779 | $3,719 | $4,107 | | Trade receivables – net | $66,367 | $71,983 | $62,968 | | Inventories – net | $186,836 | $166,701 | $174,973 | | Total current assets | $261,469 | $246,439 | $249,159 | | Total Assets | $471,020 | $457,300 | $467,874 | | Total current liabilities | $94,775 | $90,407 | $86,848 | | Long-term debt | $124,167 | $120,376 | $144,073 | | Total Liabilities | $231,955 | $225,076 | $244,062 | | Total Shareholders' Equity | $239,065 | $232,224 | $223,812 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales | $105,647 | $98,258 | $219,720 | $211,164 | | Cost of Goods Sold | $62,366 | $60,220 | $129,431 | $128,977 | | Gross Margin | $43,281 | $38,038 | $90,289 | $82,187 | | Operating Expenses | $36,125 | $33,530 | $74,427 | $69,695 | | Income from Operations | $7,156 | $4,508 | $15,862 | $12,492 | | Interest Expense and Other – net | $(2,519) | $(6,131) | $(4,874) | $(10,785) | | Net Income (Loss) | $3,608 | $(1,243) | $8,550 | $1,308 | | Basic EPS | $0.48 | $(0.17) | $1.15 | $0.18 | | Diluted EPS | $0.48 | $(0.17) | $1.14 | $0.18 | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Condensed Consolidated Statements of Shareholders' Equity (in thousands) | Metric (in thousands) | December 31, 2023 | June 30, 2024 | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | :---------------- | :------------ | | Total Shareholders' Equity | $223,555 | $223,812 | $232,224 | $239,065 | | Net Income (H1) | | $2,550 | | $8,550 | | Dividends Paid (H1) | | $(2,200) | | $(2,312) | | Stock Compensation Expense (H1) | | $651 | | $786 | | Repurchase of Common Stock (H1) | | - | | $(201) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $2,042 | $23,875 | | Net cash used in investing activities | $(3,872) | $(430) | | Net cash provided by (used in) financing activities | $890 | $(23,808) | | Decrease in cash and cash equivalents | $(940) | $(363) | | Cash and cash equivalents, End of Period | $2,779 | $4,107 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [1. Nature of Operations and Basis of Presentation](index=7&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20BASIS%20OF%20PRESENTATION) - Rocky Brands, Inc. is a leading designer, manufacturer, and marketer of premium quality footwear and apparel under brands like Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, Ranger, and Michelin[17](index=17&type=chunk) - Products are organized around six target markets: work, outdoor, western, commercial military, duty, and military, with complementary apparel and accessories[17](index=17&type=chunk) [2. Accounting Standards Updates](index=7&type=section&id=2.%20ACCOUNTING%20STANDARDS%20UPDATES) Accounting Standards Updates | Standard | Description | Anticipated Adoption Periods | Effect on Consolidated Financial Statements | | :------- | :---------- | :--------------------------- | :------------------------------------------ | | ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | Requires expanded income tax disclosures, primarily related to effective tax rate reconciliation and income taxes paid | Q4 2025 | Not expected to have a material impact | | ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | Requires expanded disclosures on comprehensive income to improve expenses and address requests for more detailed information about expense types | Q4 2027 (fiscal year) Q1 2028 (interim period) | Still assessing the impact | [3. Fair Value](index=8&type=section&id=3.%20FAIR%20VALUE) - The company uses a three-level fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[21](index=21&type=chunk)[28](index=28&type=chunk) - Fair values of cash, receivables, and payables approximate carrying values due to their short-term nature; long-term credit facilities and other short-term financing obligations also approximate fair value (Level 2)[22](index=22&type=chunk) - Deferred compensation assets are classified as trading securities (Level 1) and liabilities within deferred liabilities[23](index=23&type=chunk) [4. Revenue](index=8&type=section&id=4.%20REVENUE) - Products are distributed through three segments: Wholesale (over 10,000 retail locations globally), Retail (direct-to-consumer via web platforms, e-commerce, third-party marketplaces, and Rocky Outdoor Gear Store), and Contract Manufacturing (U.S. Military, private label)[25](index=25&type=chunk)[35](index=35&type=chunk) - Revenue is recognized when performance obligations are satisfied, generally upon shipment or at the point of sale for retail customers, measured as the net sales price[26](index=26&type=chunk) - Net sales price includes estimates for variable consideration such as discounts, allowances, customer rebates, markdowns, and product returns, based on historical and anticipated trends[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - As of June 30, 2025, December 31, 2024, and June 30, 2024, there were no contract receivable or contract liability balances outstanding[32](index=32&type=chunk) [5. Trade Receivables](index=10&type=section&id=5.%20TRADE%20RECEIVABLES) - The company maintains an allowance for credit losses based on historical experience, age of receivables, insurance status, and identification of difficult-to-collect accounts[36](index=36&type=chunk) Allowance for Credit Losses (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------- | :------------ | :---------------- | :------------ | | Allowance for credit losses | $0.8 | $1.0 | $0.9 | [6. Inventory](index=11&type=section&id=6.%20INVENTORY) Inventory Components (in thousands) | Inventory Component (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------- | :------------ | :---------------- | :------------ | | Finished goods | $169,710 | $149,328 | $156,043 | | Raw materials | $16,313 | $16,671 | $18,006 | | Work-in-process | $813 | $702 | $924 | | Total | $186,836 | $166,701 | $174,973 | - The asset associated with the returns reserve included within inventories was approximately **$0.9 million** at June 30, 2025, **$0.9 million** at December 31, 2024, and **$0.7 million** at June 30, 2024[37](index=37&type=chunk) [7. Goodwill & Identified Intangible Assets](index=11&type=section&id=7.%20GOODWILL%20%26%20IDENTIFIED%20INTANGIBLE%20ASSETS) - Goodwill remained unchanged during the six months ended June 30, 2025, at **$47,844 thousand**[9](index=9&type=chunk)[38](index=38&type=chunk) Intangible Assets (in thousands) | Intangible Assets (in thousands) | June 30, 2025 Carrying Amount | December 31, 2024 Carrying Amount | June 30, 2024 Carrying Amount | | :------------------------------- | :---------------------------- | :-------------------------------- | :---------------------------- | | Trademarks (indefinite-lived) | $74,654 | $74,654 | $78,654 | | Patents (subject to amortization) | $27 | $32 | $40 | | Customer relationships (subject to amortization) | $29,747 | $31,137 | $32,526 | | Total intangible assets other than goodwill | $104,428 | $105,823 | $111,220 | - The Muck brand impairment of **$4,000 thousand** relates to the year ended December 31, 2024[38](index=38&type=chunk)[39](index=39&type=chunk) - Amortization expense for intangible assets was **$0.7 million** for each of the three months ended June 30, 2025 and 2024, and **$1.4 million** for the six months ended June 30, 2025 and 2024[41](index=41&type=chunk) [8. Long-Term Debt](index=12&type=section&id=8.%20LONG-TERM%20DEBT) - On April 26, 2024, the company refinanced its debt, establishing a **$175.0 million** asset-based lending (ABL) facility and a **$50.0 million** term loan facility, collateralized by domestic assets[43](index=43&type=chunk) - As of June 30, 2025, borrowing capacity under the ABL Facility was **$45.7 million**[43](index=43&type=chunk) Debt Components (in thousands) | Debt Component (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :---------------------------- | :------------ | :---------------- | :------------ | | Term Facility outstanding | $30,942 | $35,123 | $49,303 | | ABL Facility (SOFR borrowings) | $103,300 | $91,300 | $100,278 | | ABL Facility (Prime borrowings) | $288 | $4,577 | $5,377 | | Total debt | $134,530 | $131,000 | $154,958 | | Long-term debt (net of current portion and issuance costs) | $124,167 | $120,376 | $144,073 | - The company was in compliance with all credit facility covenants, including minimum fixed charge coverage ratio and restrictions on dividends and share repurchases, as of June 30, 2025[47](index=47&type=chunk) [9. Taxes](index=13&type=section&id=9.%20TAXES) Effective Tax Rate | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :----------------------------- | :----------------------------- | | Effective Tax Rate | 22.2% | 23.4% | - The company's tax years 2019 through 2024 remain open to examination by most taxing authorities[50](index=50&type=chunk) - No interest and penalties on uncertain tax positions were recognized during the three and six months ended June 30, 2025 and 2024, and no material changes are expected in the next 12 months[51](index=51&type=chunk) [10. Earnings Per Share](index=15&type=section&id=10.%20EARNINGS%20PER%20SHARE) Weighted Average Shares Outstanding (in thousands) | Shares (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic - weighted average shares outstanding | 7,461 | 7,429 | 7,460 | 7,423 | | Diluted - weighted average shares outstanding | 7,493 | 7,429 | 7,493 | 7,466 | | Anti-dilutive securities | 179 | 54 | 179 | 103 | - Due to a net loss for the three months ended June 30, 2024, zero dilutive restricted share units and stock options were included as their effect would be anti-dilutive[52](index=52&type=chunk) [11. Supplemental Cash Flow Information](index=15&type=section&id=11.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Supplemental Cash Flow Information (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Interest paid | $4,593 | $5,436 | | Federal, state, and local income taxes paid, net | $1,639 | $219 | | Property, plant, and equipment purchases in accounts payable | $800 | $921 | | Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations | $57 | $23 | [12. Segment Information](index=15&type=section&id=12.%20SEGMENT%20INFORMATION) - The company operates in three reportable segments: Wholesale, Retail, and Contract Manufacturing[54](index=54&type=chunk) - Net sales to foreign countries represented approximately **3.6%** and **2.7%** of net sales for the three months ended June 30, 2025 and 2024, respectively, and **2.8%** and **2.4%** for the six months ended June 30, 2025 and 2024, respectively[58](index=58&type=chunk) Segment Net Sales (in thousands) | Segment Net Sales (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wholesale | $73,092 | $68,258 | $147,877 | $148,050 | | Retail | $29,746 | $26,110 | $66,386 | $56,517 | | Contract Manufacturing | $2,809 | $3,890 | $5,457 | $6,597 | | Total Net Sales | $105,647 | $98,258 | $219,720 | $211,164 | Segment Gross Margin (in thousands) | Segment Gross Margin (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wholesale | $29,478 | $25,432 | $59,588 | $54,463 | | Retail | $13,455 | $12,234 | $30,200 | $27,036 | | Contract Manufacturing | $348 | $372 | $501 | $688 | | Total Gross Margin | $43,281 | $38,038 | $90,289 | $82,187 | [13. Commitments and Contingencies](index=17&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is involved in ordinary course legal proceedings, with no materially adverse financial impact expected[62](index=62&type=chunk) - A gain contingency exists for an estimated **$7.9 million** potential refund from overpaid duties due to HTS code misclassification in 2021-2022, of which **$5.1 million** has been received to date; no refunds were received in H1 2025 or H1 2024[63](index=63&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=18&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, condition, and operational results, highlighting key drivers, strategies, and liquidity [BUSINESS OVERVIEW](index=18&type=section&id=BUSINESS%20OVERVIEW) - The company is a leading designer, manufacturer, and marketer of premium footwear and apparel across Wholesale, Retail, and Contract Manufacturing segments, serving work, outdoor, western, duty, commercial military, and military markets[64](index=64&type=chunk) - Strategic sourcing shifts to manufacturing facilities in the Dominican Republic and Puerto Rico were implemented in H1 2025 to mitigate adverse impacts from additional tariffs[65](index=65&type=chunk) - Inventory purchases were accelerated in 2025 ahead of new tariffs to mitigate potential business impact[65](index=65&type=chunk)[70](index=70&type=chunk) - The Retail segment's growth outpaced Wholesale and Contract Manufacturing, driven by Lehigh CustomFit expansion, digital marketing emphasis, and increased e-commerce/third-party marketplace sales[66](index=66&type=chunk) - Q2 2025 saw increased net sales (**7.5%**) and gross margin (**230 bps to 41.0%**) compared to Q2 2024, with H1 2025 net sales up **4.1%** and gross margin up **220 bps to 41.1%**[67](index=67&type=chunk)[72](index=72&type=chunk) - Interest expense declined in Q2 and H1 2025 due to lower interest rates following the April 2024 debt refinancing and reduced outstanding principal balances[69](index=69&type=chunk) [RESULTS OF OPERATIONS](index=18&type=section&id=RESULTS%20OF%20OPERATIONS) [Three Months Ended June 30, 2025 compared to Three Months Ended June 30, 2024](index=20&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Results of Operations - Three Months Ended June 30 (in thousands, %) | Metric (in thousands) | Q2 2025 | Q2 2024 | Inc./(Dec.) $ | Inc./(Dec.) % | | :-------------------- | :------ | :------ | :------------ | :------------ | | **NET SALES:** | | | | | | Wholesale | $73,092 | $68,258 | $4,834 | 7.1% | | Retail | $29,746 | $26,110 | $3,636 | 13.9% | | Contract Manufacturing | $2,809 | $3,890 | $(1,081) | (27.8)% | | Total Net Sales | $105,647 | $98,258 | $7,389 | 7.5% | | **GROSS MARGIN:** | | | | | | Wholesale Margin % | 40.3% | 37.3% | 3.0% | | | Retail Margin % | 45.2% | 46.9% | (1.7)% | | | Contract Manufacturing Margin % | 12.4% | 9.6% | 2.8% | | | Total Margin % | 41.0% | 38.7% | 2.3% | | | **OPERATING EXPENSES:** | | | | | | Operating Expenses | $36,125 | $33,530 | $2,595 | 7.7% | | % of Net Sales | 34.2% | 34.1% | 0.1% | | | **INTEREST EXPENSE AND OTHER:** | | | | | | Interest expense | $2,496 | $6,131 | $(3,635) | (59.3)% | | **INCOME TAXES:** | | | | | | Effective Tax Rate | 22.2% | 23.4% | (1.3)% | | - Wholesale net sales increased due to increased demand across key styles and brands, favorable weather, and a stronger inventory position, supported by strategic expansion of the outdoor category's lifestyle component[82](index=82&type=chunk) - Retail net sales growth was driven by Lehigh CustomFit business expansion (due to sales organization realignment and increased consumer spending/subsidy utilization), increased third-party marketplace presence, and e-commerce promotions[83](index=83&type=chunk) - Contract Manufacturing net sales decreased primarily due to no new U.S. Military contracts in 2025[84](index=84&type=chunk) - Retail gross margin percentage decreased due to Lehigh representing a larger portion of sales (lower margin) and increased promotional activity/competitive pricing on e-commerce/third-party platforms[87](index=87&type=chunk) - The significant decrease in interest expense was largely due to a **$2.6 million** loan extinguishment charge in Q2 2024 and lower interest rates/debt levels post-refinancing[90](index=90&type=chunk) [Six Months Ended June 30, 2025 compared to Six Months Ended June 30, 2024](index=23&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) Results of Operations - Six Months Ended June 30 (in thousands, %) | Metric (in thousands) | H1 2025 | H1 2024 | Inc./(Dec.) $ | Inc./(Dec.) % | | :-------------------- | :------ | :------ | :------------ | :------------ | | **NET SALES:** | | | | | | Wholesale | $147,877 | $148,050 | $(173) | (0.1)% | | Retail | $66,386 | $56,517 | $9,869 | 17.5% | | Contract Manufacturing | $5,457 | $6,597 | $(1,140) | (17.3)% | | Total Net Sales | $219,720 | $211,164 | $8,556 | 4.1% | | **GROSS MARGIN:** | | | | | | Wholesale Margin % | 40.3% | 36.8% | 3.5% | | | Retail Margin % | 45.5% | 47.8% | (2.3)% | | | Contract Manufacturing Margin % | 9.2% | 10.4% | (1.2)% | | | Total Margin % | 41.1% | 38.9% | 2.2% | | | **OPERATING EXPENSES:** | | | | | | Total Operating Expenses | $74,427 | $69,695 | $4,732 | 6.8% | | % of Net Sales | 33.9% | 33.0% | 0.9% | | | **INTEREST EXPENSE AND OTHER:** | | | | | | Interest expense | $4,896 | $10,642 | $(5,746) | (54.0)% | | **INCOME TAXES:** | | | | | | Income Tax Expense | $2,438 | $399 | $2,039 | 511.0% | | Effective Tax Rate | 22.2% | 23.4% | (1.2)% | | - Wholesale net sales slightly decreased due to a blanket commercial military order in Q1 2024 that elevated prior year sales, partially offset by increased demand in key styles and lifestyle expansion in Q2 2025[93](index=93&type=chunk) - Retail net sales increased due to growth in Lehigh CustomFit (sales organization realignment, increased consumer spending/subsidy utilization) and higher sales through third-party marketplaces and owned e-commerce websites[94](index=94&type=chunk) - Contract Manufacturing net sales decreased due to no new U.S. Military contracts and a general decrease in contract manufacturing sales[95](index=95&type=chunk) - Wholesale gross margin percentage increased due to a more favorable product mix, manufacturing efficiencies, strategic sourcing shifts, and the lower-margin commercial military order in the prior year[97](index=97&type=chunk) - Retail gross margin percentage decreased due to increased promotional activity and competitive pricing on e-commerce and third-party marketplace platforms[98](index=98&type=chunk) - Contract Manufacturing gross margin decreased due to reduced economies of scale at the Puerto Rico manufacturing facility[99](index=99&type=chunk) - Operating expenses as a percentage of net sales increased due to higher selling and outbound logistics costs associated with increased Retail sales and greater marketing investments[100](index=100&type=chunk) - Interest expense decreased significantly due to a **$2.6 million** loan extinguishment charge in H1 2024 and lower interest rates/debt levels post-refinancing[101](index=101&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=26&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Principal liquidity sources are income from operations and access to the ABL Facility; as of June 30, 2025, cash and cash equivalents were **$2.8 million**, with **$45.7 million** available under the ABL Facility[104](index=104&type=chunk) - Working capital fluctuates seasonally, typically lowest in Q1 and highest in Q2/Q3, funded by operations or the ABL Facility[105](index=105&type=chunk) - Outstanding borrowings were **$103.6 million** under the ABL Facility and **$30.9 million** under the Term Facility as of June 30, 2025[106](index=106&type=chunk) - Net cash provided by operating activities decreased to **$2.0 million** in H1 2025 from **$23.9 million** in H1 2024, primarily due to increased cash used for inventory purchases (**$20.1 million** in H1 2025 vs **$5.8 million** in H1 2024) driven by tariffs and anticipated demand[109](index=109&type=chunk)[110](index=110&type=chunk) - Net cash used in investing activities increased to **$3.9 million** in H1 2025 from **$0.4 million** in H1 2024, mainly due to higher capital expenditures for manufacturing and IT[112](index=112&type=chunk) - Net cash provided by financing activities was **$0.9 million** in H1 2025, a shift from **$23.8 million** used in H1 2024, driven by proceeds from the revolving facility offset by term loan and dividend payments[113](index=113&type=chunk) - A share repurchase program of up to **$7.5 million** was announced on February 25, 2025, effective until February 24, 2026[114](index=114&type=chunk) [CRITICAL ACCOUNTING POLICIES AND ESTIMATES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - Financial statement preparation requires management estimates and assumptions, which are evaluated ongoingly and based on historical experience and reasonable assumptions[116](index=116&type=chunk) - Critical accounting policies and estimates are detailed in the Annual Report on Form 10-K for the year ended December 31, 2024[117](index=117&type=chunk) [SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995](index=27&type=section&id=SAFE%20HARBOR%20STATEMENT%20UNDER%20THE%20PRIVATE%20SECURITIES%20REFORM%20ACT%20OF%201995) - The report contains forward-looking statements subject to risks and uncertainties, including dependence on sales forecasts, changes in consumer demand, seasonality, competition, reliance on suppliers, international trade risks, and cybersecurity[118](index=118&type=chunk) - Investors are cautioned that assumptions underlying forward-looking statements may be inaccurate, and the company assumes no obligation to update them[118](index=118&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes to market risk disclosures have occurred since the Annual Report on Form 10-K for December 31, 2024 - No material changes to market risk disclosures as presented in the Annual Report on Form 10-K for the year ended December 31, 2024[119](index=119&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that material information is accumulated, processed, summarized, and reported timely[121](index=121&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[123](index=123&type=chunk) [PART II -- OTHER INFORMATION](index=28&type=section&id=PART%20II%20--%20OTHER%20INFORMATION) [ITEM 1A. RISK FACTORS](index=28&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section highlights new tariffs on imported products as a material risk, potentially impacting business, financial condition, and operations - Additional tariffs on products imported to the U.S. from countries like China, Vietnam, Dominican Republic, India, Cambodia, and Mexico pose a significant risk[125](index=125&type=chunk) - These tariffs may materially increase cost of goods sold, reduce gross margins, create consumer/economic uncertainty, reduce product demand, and negatively impact the carrying value of indefinite intangible assets[125](index=125&type=chunk)[127](index=127&type=chunk) - The company is implementing strategies like reevaluating sourcing countries, negotiating costs, and adjusting pricing, but there is no assurance these will fully offset the potential negative impact[126](index=126&type=chunk) [ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202%20-%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered equity sales occurred, and no shares were repurchased under the common stock repurchase program during Q2 2025 - No unregistered sales of equity securities occurred during the period[128](index=128&type=chunk) - The company announced a **$7,500,000** share repurchase plan on February 25, 2025, effective until February 24, 2026[114](index=114&type=chunk)[131](index=131&type=chunk) Common Stock Repurchase Program | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Maximum Shares that May Yet be Purchased Under Plans or Programs | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | - | - | $7,299,140 | | May 1, 2025 - May 31, 2025 | - | - | $7,299,140 | | June 1, 2025 - June 30, 2025 | - | - | $7,299,140 | | Total | - | - | $7,299,140 | [ITEM 5. OTHER INFORMATION](index=29&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[132](index=132&type=chunk) [ITEM 6. EXHIBITS](index=30&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with Form 10-Q, including officer certifications and XBRL financial statements - Exhibits include Certification Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) of the Principal Financial Officer (31.2*) and Section 1350 Certification of Principal Executive Officer/Principal Financial Officer (32**)[135](index=135&type=chunk) - Financial statements from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, are attached as Exhibits 101 in Inline XBRL format[135](index=135&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is signed by Thomas D. Robertson, Chief Operating Officer, Chief Financial Officer, and Treasurer - The report was signed on August 7, 2025, by Thomas D. Robertson, Chief Operating Officer, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer)[139](index=139&type=chunk)

Core Insights - Rocky Brands, Inc. (NASDAQ: RCKY) reported strong Q2 results, leading to a significant increase in stock price [1] - The company demonstrated robust sales momentum during the quarter, positively impacting earnings [1] - Rocky Brands raised its earnings guidance for 2025, indicating confidence in future performance [1] Financial Performance - The Q2 results showcased strong sales growth, contributing to improved earnings figures [1] - The company's ability to raise guidance for 2025 reflects a positive outlook based on current performance trends [1]

Market Performance - U.S. stocks showed mixed trading results, with the Nasdaq Composite gaining approximately 0.5% [1] - The Dow increased by 0.02% to 44,639.69, while the S&P 500 rose by 0.21% to 6,384.38 [1] - Utilities shares experienced a rise of 0.8%, while energy stocks fell by 1.2% [1] Commodities - Crude oil prices increased by 0.8% to $69.73, while gold rose by 1% to $3,356.50 [5] - Silver prices decreased by 1.3% to $37.775, and copper fell by 0.9% to $5.5750 [5] European Markets - European shares were mostly higher, with the eurozone's STOXX 600 gaining 0.01% and Spain's IBEX 35 Index rising by 0.21% [6] - London's FTSE 100 fell by 0.08%, while Germany's DAX 40 and France's CAC 40 rose by 0.20% and 0.26%, respectively [6] Asian Markets - Asian markets closed mixed, with Japan's Nikkei 225 down by 0.05% and Hong Kong's Hang Seng down by 1.36% [7] - China's Shanghai Composite rose by 0.17%, and India's BSE Sensex gained 0.18% [7] Company Earnings - Wingstop Inc. shares surged by 24% to $360.20 after reporting better-than-expected second-quarter EPS and sales [9] - FTAI Aviation Ltd. shares increased by 20% to $137.34 following strong quarterly EPS and sales [9] - Rocky Brands Inc. shares rose by 26% to $29.00 after announcing better-than-expected quarterly earnings [9] - Vyne Therapeutics Inc. shares plummeted by 74% to $0.3764 after failing to meet trial endpoints [9] - Sos Ltd. shares dropped by 55% to $2.7184 after announcing a $7.5 million registered direct offering [9] - Avis Budget Group, Inc. shares fell by 15% to $172.40 following worse-than-expected quarterly EPS and sales [9] Economic Indicators - The U.S. economy expanded at an annualized rate of 3% in the second quarter, recovering from a 0.5% contraction in the previous quarter [11] - Private businesses added 104,000 jobs in July, surpassing market estimates of a 75,000 increase [11] - Crude oil inventories in the U.S. rose by 7.698 million barrels, contrasting with market expectations of a 2 million barrel decline [11]

Financial Data and Key Metrics Changes - Reported net sales for Q2 increased by 7.5% to $105.6 million, with wholesale sales up 7.1% to $73.1 million and retail net sales up 13.9% to $29.7 million [19] - Adjusted EPS more than tripled to $0.55 per diluted share compared to $0.17 per diluted share a year ago [22] - Gross profit was $43.3 million, representing 41% of net sales, an increase from 38.7% in the same period last year [19][20] - Operating income increased by 58.7% to $7.2 million, or 6.8% of net sales [21] Business Line Data and Key Metrics Changes - The Outdoor category, led by Extra Tough and Muck, is emerging as a key growth engine alongside traditional work and Western strengths [6] - Extra Tough maintained its position as the fastest-growing brand, with strong demand and expanding distribution [7] - Muck delivered its best quarter-to-quarter comparison since 2023, with strong performance driven by improved inventory positions and favorable weather [9] - Durango achieved high single-digit growth, while Georgia Boot showed progressive improvement throughout the quarter [10][11] Market Data and Key Metrics Changes - U.S. Wholesale significantly outpaced last year with strong double-digit growth, and e-commerce growth was equally strong [8] - The Outdoor category made up about one-third of sales for Q2, indicating its growing importance [41] - The work category remains the largest segment, followed by outdoor, with growth primarily in Extra Tough and Muck [40] Company Strategy and Development Direction - The company is focused on shifting production to its Dominican Republic and Puerto Rican facilities to mitigate tariff impacts and improve cost competitiveness [60][61] - The strategic positioning and operational efficiencies are expected to drive continued growth and increased shareholder value [16] - The company is optimistic about military prospects, having earned a USMC hot weather boot certification [15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding consumer demand, noting positive sell-through rates in key categories despite some volatility [46][47] - The company is increasing its 2025 revenue guidance to a growth of 45% compared to 2024 levels, up from previous low single-digit expectations [23] - Management highlighted the importance of maintaining competitive pricing while ensuring retailer margins are preserved [33] Other Important Information - The company has approximately $11 million of incremental tariffs on the balance sheet that will impact the P&L over the remainder of the year [22] - Inventory at the end of Q2 was $186.8 million, up 6.8% year-over-year, driven by higher tariffs [22] Q&A Session Summary Question: How have the supply chain shifts been going? - Management reported being ahead of schedule in shifting production to the Dominican Republic and Puerto Rico, with boots already inbound [28][29] Question: How is pricing flowing through to retail partners? - Management noted some pushback but overall positive reception, with price increases implemented in June [31][32] Question: What are the drivers behind the guidance raise? - The guidance increase is primarily driven by strong Q2 performance and positive order indications for the second half of the year [34][35] Question: How does the outdoor business compare to the work business? - The outdoor category is growing faster than the work category, which remains the largest segment [40][41] Question: What is the state of consumer demand? - Management indicated mixed signals, with positive sell-through in certain categories but caution due to market volatility [46][47] Question: What are the prospects for market share gains from in-house manufacturing? - Management believes in-house operations will provide a competitive advantage, with plans to increase in-house production to around 45% [61][62] Question: What is the breakdown between wholesale and direct-to-consumer sales? - Management disclosed that over half of retail sales come from the Lehigh business, with branded e-commerce growing [65][66] Question: How much debt is expected to be paid down in the second half of the year? - Management anticipates a debt reduction of 10% to 13% from the prior year, though not as significant as the previous year [70]

Exhibit 99 Rocky Brands, Inc. Announces Second Quarter 2025 Results Net Sales Increased 7.5% to $105.6 Million Income from Operations Increased 58.7% to $7.2 Million Net Income Increased to $3.6 Million or $0.48 Per Diluted Share, compared to Net Loss of $1.2 Million or $0.17 Per Diluted Share Brooks continued, "Looking ahead, we are approaching the remainder of 2025 with optimism about the momentum in our business coupled with the appropriate level of caution given the overall market uncertainty. Bookings ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34382 ROCKY BRANDS, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Ohio No. 31-1364046 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ...

Core Insights - The article discusses the investment strategies and achievements of Paul Franke, a seasoned investor with 38 years of trading experience, emphasizing his unique stock selection methods and performance metrics [1]. Group 1: Investment Strategies - Paul Franke employs a contrarian stock selection style, utilizing daily algorithm analysis of fundamental and technical data to identify investment opportunities [1]. - His system, named "Victory Formation," focuses on supply/demand imbalances indicated by specific stock price and volume movements [1]. - The "Bottom Fishing Club" articles highlight deep-value candidates or stocks showing significant upward technical momentum reversals [1]. - "Volume Breakout Report" articles analyze positive trend changes supported by strong price and volume trading actions [1]. Group 2: Performance Metrics - Franke was consistently ranked among the top investment advisors nationally during the 1990s, recognized for his macro views on stock markets and commodities [1]. - He achieved the 1 ranking in the Motley Fool® CAPS stock picking contest during parts of 2008 and 2009, out of over 60,000 portfolios [1]. - As of September 2024, he is ranked in the Top 3% of bloggers by TipRanks® for 12-month stock picking performance based on suggestions made over the last decade [1]. Group 3: Risk Management - Franke advises investors to implement stop-loss levels of 10% or 20% on individual stock choices and to maintain a diversified portfolio of at least 50 well-positioned stocks to enhance regular stock market outperformance [1].

Rocky Brands (RCKY) Q1 2025 Earnings Call April 29, 2025 09:19 PM ET Speaker0 Ladies and gentlemen, greetings, and welcome to the Rocky Brands Inc. First Quarter Fiscal twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cody McAllister of ICR. Please go ahead. Speaker1 Thank you, and thanks ...

Rocky Brands (RCKY) Q1 2025 Earnings Call April 29, 2025 04:30 PM ET Company Participants Cody McAlester - VP - Investor RelationsJason Brooks - Chairman & Chief Executive OfficerThomas Robertson - COO & CFO Conference Call Participants Janine Stichter - Managing Director & Analyst - Consumer Retail & Lifestyle BrandsJonathan Komp - Senior Research Analyst Operator Ladies and gentlemen, greetings, and welcome to the Rocky Brands Inc. First Quarter Fiscal twenty twenty five Earnings Conference Call. At this ...

Financial Data and Key Metrics Changes - Reported net sales for Q1 increased 1.1% year over year to $114.1 million, slightly ahead of expectations [18] - Retail sales increased 20.5% to $36.6 million, while wholesale sales decreased by $5 million or 6.3% to $74.8 million [18] - Gross profit for Q1 was $47 million, representing 41.2% of sales, the highest gross margin reported in Q1, compared to 39.1% in the same period last year [19] - Adjusted net income for Q1 was $5.5 million or $0.73 per diluted share, compared to $3.1 million or $0.41 per diluted share a year ago [21] Business Line Data and Key Metrics Changes - The rubber boot business, particularly the XTRA TUF brand, experienced strong demand with double-digit growth in Q1 [6][8] - MUC brand also saw better than expected growth, particularly in the women's segment, driven by improved winter weather [10] - The Rocky brand group showed increases in both work and outdoor categories, with Rocky work delivering the strongest performance [12][13] - Georgia Boot faced a softer March due to economic uncertainty, but new product introductions continued to perform well [11] Market Data and Key Metrics Changes - Retail segment saw a 20% top line growth, indicating strong demand across distribution channels [5] - The company is shifting sourcing from China to countries like Vietnam, Cambodia, and India, aiming to reduce reliance on Chinese manufacturing [7][28] - The B2B Lehigh business reported high teens sales growth, marking the third consecutive quarter of double-digit gains [16] Company Strategy and Development Direction - The company plans to implement price increases on most footwear styles in response to higher tariffs, while maintaining flexibility to adjust prices based on future changes [7][29] - There is a focus on diversifying sourcing to mitigate tariff impacts, with a goal to reduce product sourced from China to less than 20% by year-end [28] - The company aims to maintain gross profit dollars despite anticipated pressure on gross margins due to tariffs [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged growing macroeconomic uncertainty but expressed confidence in navigating the current retail environment due to a diverse brand portfolio [5][18] - The company reiterated its full-year 2025 guidance, expecting low single-digit revenue growth over 2024 levels [23] - Management noted that consumer demand has not shown panic despite rising prices, indicating a stable retail environment [34] Other Important Information - Interest expense decreased significantly to $2.4 million from $4.5 million year over year due to lower interest rates from refinancing [20][21] - Inventory levels increased by 6.3% year over year, as the company accelerated receipts to mitigate tariff impacts [22] Q&A Session Summary Question: Can you elaborate on the guidance and the migration out of China? - Management indicated a strong inventory position allowing them to navigate tariff impacts and transition sourcing out of China effectively [27][28] Question: What are wholesale partners saying about consumer ability to absorb price increases? - Management noted that retail partners are cautiously optimistic, with no significant panic from consumers regarding price increases [32][34] Question: How much capacity is being shifted to third-party manufacturers in Vietnam and India? - Management stated that approximately 90-92% of products have found new homes, with ongoing efforts to transition the remaining 8% from China [56][57]