Financial Data and Key Metrics Changes - In Q4 2025, net sales increased by 9.1% year-over-year to $139.7 million, marking the highest growth rate of the year and the highest in over three years [13] - For the full year, net sales grew by 6.2% to $482 million, with gross margins expanding by 150 basis points to 40.9% despite absorbing approximately $10.9 million in tariffs [19][20] - Gross profit for Q4 was $57.7 million, or 41.3% of net sales, compared to $53.2 million, or 41.5% in the same period last year [14] Business Line Data and Key Metrics Changes - Retail sales in Q4 increased by 30.8% to $57 million, following a 15.1% growth in the year-ago quarter [13] - Wholesale sales decreased by 2.1% to $79.6 million, while contract manufacturing sales were flat at $3.2 million [13] - The Muck brand saw sales growth in the low 20% range, driven by strong performance in e-commerce [6] Market Data and Key Metrics Changes - E-commerce sales fueled a 30%+ growth in overall retail sales, with significant contributions from branded websites [11] - The company experienced strong demand in the direct-to-consumer channel, particularly during the holiday season [3] - The commercial, military, and duty segments closed Q4 nearly in line with the previous year, despite challenges from a government shutdown [11] Company Strategy and Development Direction - The company plans to increase marketing spend to drive full-price selling and capitalize on growth opportunities in 2026 [12] - A focus on diversifying sourcing structures and leveraging manufacturing facilities is expected to provide competitive advantages [37] - The company aims to maintain operational flexibility and a strong balance sheet to support continued growth and value creation [4] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum heading into 2026, despite anticipated margin pressures from tariffs in the first half of the year [21] - The company expects revenue to increase approximately 6% over 2025, with retail growth outpacing wholesale [21] - Management noted that consumer sentiment remains stable, with expectations of benefiting from increased tax refunds [47] Other Important Information - The company returned $4.6 million to shareholders through quarterly dividends in 2025 [20] - Interest expense decreased to $2.5 million in Q4, reflecting lower debt levels and interest rates [18] Q&A Session Summary Question: Understanding the fourth quarter strength in the retail channel - Management noted that sales exceeded expectations, driven by effective marketing and favorable weather conditions [27] Question: Potential size and growth rate of XTRATUF and Muck brands in 2026 - Muck is projected to exceed $100 million, while XTRATUF is expected to approach $100 million, having tripled since acquisition [30] Question: Updates on gross margin expectations for 2026 amidst tariff headwinds - Management confirmed expectations for flat gross margins in 2026, with anticipated tariff impacts of about $10 million in the first half [35][36]

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 [19] - 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 a 20% top line growth in the retail segment [5][6] - MUC brand also saw better than expected growth due to improved winter weather, with women's business delivering double-digit increases [10] - The Rocky brand group showed increases in both work and outdoor categories, with Rocky work delivering the strongest performance [12][13] Market Data and Key Metrics Changes - The company is shifting sourcing from China to countries like Vietnam, Cambodia, and India, aiming to reduce reliance on Chinese manufacturing [7][28] - The company anticipates total volume out of China to be just less than 20% by the end of the year [28] Company Strategy and Development Direction - The company plans to implement price increases on the majority of footwear styles in early June to mitigate the impact of higher tariffs [7][29] - The strategy includes diversifying sourcing and increasing production in the Dominican Republic and Puerto Rico [7][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a higher degree of uncertainty for the remainder of the year but expressed confidence in maintaining financial targets due to strong Q1 performance [17] - The company is prepared to navigate the current retail environment with a diverse brand portfolio and functional footwear [18] Other Important Information - Interest expense decreased significantly to $2.4 million from $4.5 million year over year due to lower interest rates from debt refinancing [21] - Inventory at the end of Q1 was $175.5 million, up 6.3% compared to the previous year, as the company accelerated receipts to avoid tariff impacts [22] Q&A Session Summary Question: Can you elaborate on the guidance and the migration out of China? - Management indicated a good inventory position allowing them to transition products out of China and into other countries, expecting to reduce volume from China to less than 20% by year-end [27][28] Question: What are your wholesale partners saying about consumer ability to absorb price increases? - Management noted that there hasn't been significant panic from consumers, and retail partners are cautiously navigating the situation [34][36] Question: Can you clarify the guidance regarding revenue and gross margin? - Management confirmed that while revenue assumptions remain unchanged, they expect lower gross margin percentages but aim to maintain gross profit dollars [42][43] Question: How are you planning the price increases? - The company plans to implement price increases to preserve gross profit dollars while being mindful of retail dynamics [45][46] Question: What is the capacity shift to third-party manufacturers in Vietnam and Cambodia? - Management stated that they have found homes for about 90-92% of their products and are working to secure the remaining capacity [56][57]