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Rocky Brands(RCKY) - 2024 Q3 - Quarterly Results
RCKYRocky Brands(RCKY)2024-10-30 20:15

Financial Performance - Net sales for Q3 2024 decreased 8.8% to 114.6millioncomparedto114.6 million compared to 125.6 million in Q3 2023, or 2.4% excluding non-recurring sales[2] - Operating income was 10.1million,downfrom10.1 million, down from 14.3 million in the same quarter last year[6] - Net income for Q3 2024 was 5.3million,or5.3 million, or 0.70 per diluted share, compared to 6.8million,or6.8 million, or 0.93 per diluted share in Q3 2023[8] - Adjusted net income was 5.8million,or5.8 million, or 0.77 per diluted share, down from 8.0million,or8.0 million, or 1.09 per diluted share in the prior year[8] - Net sales for the three months ended September 30, 2024, were 114,554,000,adecreaseof8.5114,554,000, a decrease of 8.5% compared to 125,614,000 for the same period in 2023[15] - Income from operations for the three months ended September 30, 2024, was 10,071,000,adeclineof29.010,071,000, a decline of 29.0% from 14,279,000 in the prior year[15] - Net income for the three months ended September 30, 2024, was 5,279,000,down22.75,279,000, down 22.7% from 6,827,000 in the same period of 2023[15] - Adjusted net income for the three months ended September 30, 2024, was 5,809,000,comparedto5,809,000, compared to 8,048,000 in the same period last year, a decrease of 27.5%[16] - Basic earnings per share for the three months ended September 30, 2024, were 0.71,downfrom0.71, down from 0.93 in the same period of 2023, a decline of 23.7%[15] Margins and Expenses - Gross margin increased by 110 basis points to 38.1% in Q3 2024 from 37.0% in Q3 2023[4] - Operating expenses rose to 33.6million,or29.333.6 million, or 29.3% of net sales, compared to 32.3 million, or 25.7% of net sales in the prior year[5] - Gross margin for the three months ended September 30, 2024, was 43,646,000,representingagrossmarginpercentageof38.143,646,000, representing a gross margin percentage of 38.1%, down from 37.1% in the prior year[15] - Operating expenses increased to 33,575,000 for the three months ended September 30, 2024, compared to 32,259,000inthesameperiodlastyear,reflectingariseof4.132,259,000 in the same period last year, reflecting a rise of 4.1%[15] Debt and Inventory - Inventories decreased by 11.8% year-over-year to 171.8 million as of September 30, 2024[9] - Total debt decreased by 29.7% year-over-year to 150.3millionasofSeptember30,2024[10]−Interestexpensedecreasedto150.3 million as of September 30, 2024[10] - Interest expense decreased to 3.3 million from 5.8millionayearagoduetolowerdebtlevelsandinterestrates[7]AdjustmentsandNon−GAAPMeasures−Thecompanyhighlightedtheimpactofsupplierdisputesonnetsales,withadjustednetsalesreflectingasignificantadjustmentfromreportedfigures[16]−ThecompanyexcludedcostsrelatedtotheclosureoftheRockIslandmanufacturingfacilityfornon−GAAPmeasures,asthesecostsdidnotreflectcurrentoperatingperformance[19]−Supplierdisputeinventoryadjustmentswereexcludedfromnon−GAAPmeasuresastheywereuniquetoaresolveddisputewithamanufacturingsupplier[19]−Returnsrelatedtosupplierdisputeswereexcludedfromcertainnon−GAAPmeasurestofacilitateausefulevaluationofcurrentoperatingperformance[19]−Thecompanyemphasizedthatadjustmentsfornon−GAAPmeasuresprovideinvestorswithadditionalmeanstoevaluatenetsalestrendsandexpensetrends[19]−Theadjustmentsmadefornon−GAAPmeasureswereaimedatfacilitatingausefulevaluationofcurrentoperatingperformanceandcomparisonstopastresults[19]−Thecompanyhighlightedthattheadjustmentsforamortizationchargesaresignificantlyimpactedbythevaluationofacquisitions,thusprovidingaclearerpictureofoperatingperformance[19]OtherNotableEvents−ThecompanyreportedagainonthesaleoftheServusbrand,whichincludedthedisposalofnon−financialassetsandrelatedexpenses[21]−RestructuringcostswereincurredduetoseveranceexpensesassociatedwithheadcountreductionsfollowingtheintegrationoftheacquiredperformanceandlifestylefootwearbusinessofHoneywellInternationalInc.in2022andthesaleofServusin2023[19]−TermdebtextinguishmentcostswererecordedduringQ22024,includingprepaymentpenaltiesandacceleratedamortizationofdeferredfinancingfees[20]−Thecompanyreportedanadjustedoperatingincomeof5.8 million a year ago due to lower debt levels and interest rates[7] Adjustments and Non-GAAP Measures - The company highlighted the impact of supplier disputes on net sales, with adjusted net sales reflecting a significant adjustment from reported figures[16] - The company excluded costs related to the closure of the Rock Island manufacturing facility for non-GAAP measures, as these costs did not reflect current operating performance[19] - Supplier dispute inventory adjustments were excluded from non-GAAP measures as they were unique to a resolved dispute with a manufacturing supplier[19] - Returns related to supplier disputes were excluded from certain non-GAAP measures to facilitate a useful evaluation of current operating performance[19] - The company emphasized that adjustments for non-GAAP measures provide investors with additional means to evaluate net sales trends and expense trends[19] - The adjustments made for non-GAAP measures were aimed at facilitating a useful evaluation of current operating performance and comparisons to past results[19] - The company highlighted that the adjustments for amortization charges are significantly impacted by the valuation of acquisitions, thus providing a clearer picture of operating performance[19] Other Notable Events - The company reported a gain on the sale of the Servus brand, which included the disposal of non-financial assets and related expenses[21] - Restructuring costs were incurred due to severance expenses associated with headcount reductions following the integration of the acquired performance and lifestyle footwear business of Honeywell International Inc. in 2022 and the sale of Servus in 2023[19] - Term debt extinguishment costs were recorded during Q2 2024, including prepayment penalties and accelerated amortization of deferred financing fees[20] - The company reported an adjusted operating income of 10,763,000 for the three months ended September 30, 2024, down from $15,822,000 in the same period last year, a decrease of 32.5%[16] - The weighted average number of diluted shares outstanding for the three months ended September 30, 2024, was 7,503,000, compared to 7,375,000 in the prior year[15]