Rocky Brands(US:RCKY)2022-03-15 20:11Financial Performance - Total net sales for the year ended December 31, 2021, reached $514.2 million, an increase of 85.4% compared to $277.3 million in 2020[161]. - Wholesale net sales increased by 110.8% to $391.1 million, driven by strong demand and the acquisition of new brands, contributing $160 million to this segment[161][162]. - Retail net sales grew by 29.9% to $94.7 million, with $17.6 million attributed to the acquired brands, bolstered by increased e-commerce traffic[162]. - Contract manufacturing net sales increased by 51.0% to $28.5 million, supported by military contracts and private label programs[161][163]. - Net income for 2021 was $20.6 million, slightly down from $21.0 million in 2020, with diluted earnings per share at $2.77[219]. - The pro forma net sales for the twelve months ended December 31, 2021, were $552.9 million, up from $482.6 million in 2020[271]. - The pro forma net income for the twelve months ended December 31, 2021, was $40.2 million, down from $41.7 million in 2020[271]. Operating Expenses - Operating expenses rose by 104.4% to $158.6 million, primarily due to integration costs from the acquisition, with $11.9 million related to the acquisition in 2021[167]. - Operating income decreased to 7.0% of net sales from 9.8% in the previous year, reflecting increased operating expenses[160]. - Advertising expenses increased to approximately $17.9 million in 2021 from $8.4 million in 2020, attributed to the acquisition[247]. - Shipping costs rose to approximately $25.1 million in 2021 from $10.5 million in 2020, also due to the acquisition[248]. - Depreciation and amortization expenses increased to $11,342,000 in 2021 from $5,240,000 in 2020[224]. Cash Flow and Liquidity - Operating activities resulted in a net cash outflow of $54.9 million in 2021, compared to an inflow of $31.4 million in 2020, primarily due to increased inventories and accounts receivable[175]. - The principal use of cash in 2021 was to fund an acquisition, while 2020 cash was mainly used for investments in manufacturing and IT[176]. - The company anticipates sufficient liquidity to fund operations for at least the next twelve months, contingent on future operating performance[174]. - Total cash and cash equivalents at the end of the period decreased to $5,909,000 from $28,353,000 at the beginning of the period[224]. Assets and Liabilities - The company's total assets as of December 31, 2021, were $624.6 million, significantly higher than $229.1 million in 2020, indicating strong growth[217]. - Current assets increased to $375.3 million in 2021 from $163.2 million in 2020, driven by higher trade receivables and inventories[217]. - The company's total liabilities increased to $426.7 million in 2021 from $49.6 million in 2020, primarily due to the long-term debt incurred from acquisitions[217]. - Total contractual obligations amounted to $287.5 million as of December 31, 2021, with long-term debt comprising $273.6 million[180]. Acquisitions - The acquisition of Honeywell's performance and lifestyle footwear business was completed for approximately $207 million, expanding the brand portfolio significantly[148][149]. - The acquisition contributed net sales of $179.0 million and net income of $16.5 million for the year ended December 31, 2021[262]. - The acquisition of the Boston Group on March 15, 2021, was for approximately $212 million, contributing to identified intangible assets of $149.2 million[213]. - Total identifiable net assets from the acquisition were valued at $215.1 million, with goodwill amounting to $50.6 million[268][269]. Taxation - The effective tax rate decreased to 19.0% from 22.3%, mainly due to a one-time benefit from the release of valuation allowances[169]. - Federal, state, and local income taxes paid in 2021 totaled $8,638,000, compared to $4,669,000 in 2020, indicating a rise in tax obligations[344]. Shareholder Information - The company paid dividends of $4,299,000 in 2021, up from $4,093,000 in 2020, reflecting an increase in the quarterly dividend from $0.56 to $0.59 per share[224]. - The maximum authorized share repurchase amount remained at $7,500,000 for both 2021 and 2020, with no shares repurchased in 2021 compared to 129,095 shares in 2020[318]. - The company recognized a tax benefit of $192,000 from share-based compensation in 2021, compared to $58,000 in 2020, representing a 231.0% increase[322]. Employee Compensation - The company’s 401(k) savings plan includes a contribution of 3% of applicable salary and a matching contribution of up to 1% of the employee's applicable salary[303]. - 401(k) plan sponsor contributions increased from $961,000 in 2020 to $1,311,000 in 2021, representing a 36.4% increase[304]. - Share-based compensation expense rose from $780,000 in 2020 to $1,265,000 in 2021, a 62.1% increase[322]. Market Presence - The company has a diverse distribution network with over 10,000 retail store locations across the U.S., Canada, and Europe, indicating strong market presence[329]. - The company has a diverse portfolio of brands, including Rocky, Georgia Boot, and Michelin, targeting six key markets[227]. - The company has restructured its reporting segments to include Wholesale, Retail, and Contract Manufacturing, reflecting changes in business strategy[229].