Rocky Brands(RCKY) - 2025 Q1 - Quarterly Results

Performance Overview Rocky Brands began Q1 2025 with strong retail sales growth and improved profitability, while addressing new U.S. tariffs - Retail segment sales grew 20%, driven by direct-to-consumer and Lehigh safety shoe businesses, indicating healthy demand[3] - The company plans Q2 price increases and reduced China sourcing to mitigate higher U.S. tariffs, utilizing Dominican Republic and Puerto Rico facilities[3] Q1 2025 Key Performance Highlights (YoY) | Metric | Q1 2025 | Change | | :--- | :--- | :--- | | Net Sales | $114.1 Million | +1.1% | | Income from Operations | $8.7 Million | +8.8% | | Net Income | $4.9 Million | +88.5% | | Diluted EPS | $0.66 | +94.1% | | Adjusted Net Income | $5.5 Million | +77.9% | | Total Debt | $128.6 Million | -17.5% | First Quarter 2025 Financial Review Q1 2025 saw net sales rise 1.1% to $114.1 million, driven by retail growth, improved gross margin, and lower interest expenses Sales Performance by Segment Retail segment sales surged 20.4% to $36.6 million, offsetting a 6.3% decline in Wholesale sales to $74.8 million Net Sales by Segment (Q1 2025 vs. Q1 2024) | Segment | Q1 2025 Sales | Q1 2024 Sales | % Change | | :--- | :--- | :--- | :--- | | Wholesale | $74.8 million | $79.8 million | -6.3% | | Retail | $36.6 million | $30.4 million | +20.4% | | Contract Manufacturing | $2.7 million | $2.7 million | 0.0% | | Total Net Sales | $114.1 million | $112.9 million | +1.1% | Profitability Analysis Q1 2025 profitability improved with gross margin expanding to 41.2% and net income surging 88.5% due to lower interest expenses - Gross margin increased by 210 basis points to 41.2%, driven by improved Wholesale margins and a higher mix of Retail sales[5] - Operating expenses rose due to increased selling and logistics costs supporting direct-to-consumer business growth[6] - Interest expense decreased to $2.4 million from $4.5 million year-over-year, due to lower rates from April 2024 debt refinancing and reduced debt levels[9] Profitability Metrics (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Gross Margin | $47.0M (41.2%) | $44.1M (39.1%) | +6.5% | | Income from Operations | $8.7M | $8.0M | +8.8% | | Net Income | $4.9M | $2.6M | +88.5% | | Diluted EPS | $0.66 | $0.34 | +94.1% | | Adjusted Net Income | $5.5M | $3.1M | +77.9% | Balance Sheet Review As of March 31, 2025, the balance sheet strengthened with a 17.5% reduction in total debt to $128.6 million Key Balance Sheet Items (as of March 31, 2025) | Account | March 31, 2025 | March 31, 2024 | % Change (YoY) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $2.6 million | $3.1 million | -16.1% | | Inventories | $175.5 million | $165.1 million | +6.3% | | Total Debt (net) | $128.6 million | $155.95 million* | -17.5% | - *Note: Total debt for March 31, 2024, is derived from the sum of current and long-term debt components[18] Financial Statements This section provides unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, and GAAP to non-GAAP reconciliations Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $468.2 million, with total liabilities decreasing to $232.0 million, increasing shareholders' equity Condensed Consolidated Balance Sheet (in thousands) | | March 31, 2025 | March 31, 2024 | |:---|---:|---:| | Total current assets | $258,681 | $247,338 | | TOTAL ASSETS | $468,223 | $466,527 | | Total current liabilities | $98,085 | $74,748 | | TOTAL LIABILITIES | $232,010 | $241,232 | | Total shareholders' equity | $236,213 | $225,295 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $468,223 | $466,527 | Condensed Consolidated Statements of Operations Q1 2025 net sales reached $114.1 million, with net income significantly increasing to $4.9 million, or $0.66 per diluted share Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|---:|---:| | NET SALES | $114,073 | $112,906 | | GROSS MARGIN | $47,008 | $44,149 | | INCOME FROM OPERATIONS | $8,706 | $7,983 | | NET INCOME | $4,941 | $2,550 | | Diluted EPS | $0.66 | $0.34 | Reconciliation of GAAP to Non-GAAP Measures Non-GAAP adjustments exclude acquisition-related amortization, showing Q1 2025 adjusted net income of $5.5 million, a 77.9% increase year-over-year GAAP to Non-GAAP Reconciliation Highlights (in thousands, except per share data) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---|---:|---:| | NET INCOME, AS REPORTED (GAAP) | $4,941 | $2,550 | | Total Non-GAAP Adjustments | $692 | $692 | | Tax Impact of Adjustments | ($154) | ($162) | | ADJUSTED NET INCOME (Non-GAAP) | $5,479 | $3,080 | | DILUTED EPS, AS REPORTED (GAAP) | $0.66 | $0.34 | | ADJUSTED DILUTED EPS (Non-GAAP) | $0.73 | $0.41 | Supplementary Information This section includes investor conference call details, a corporate profile, forward-looking statements, and non-GAAP financial measure explanations - A conference call and live webcast will be held on April 29, 2025, at 4:30 pm ET to discuss Q1 2025 results[14] - Rocky Brands designs, manufactures, and markets footwear and apparel under brands like Rocky®, Georgia Boot®, Durango®, and The Original Muck Boot Company®[15] - Non-GAAP measures exclude acquisition-related intangible asset amortization, aiding management in evaluating operating performance and analyzing business trends[23][25]