Rocky Brands(US:RCKY)2020-04-29 00:14Financial Data and Key Metrics Changes - Total net sales for Q1 2020 were approximately $55.7 million, a decline of 15.5% compared to $65.9 million in Q1 2019 [26] - Gross profit for Q1 2020 was $19.3 million, representing 34.7% of sales, compared to $23 million or 34.9% of sales in the same period last year [27] - Net income for the quarter was $1.2 million or $0.16 per diluted share, down from $3.6 million or $0.48 per diluted share in the prior year [31] Business Line Data and Key Metrics Changes - Wholesale sales decreased by 17.5% to $35 million [26] - Retail sales increased by 9.4% to $16.9 million [26] - Military sales decreased by 4.3% to $3.8 million [26] - Adjusted gross margins by segment were 33.9% for wholesale, 44.1% for retail, and 26.5% for military [29] Market Data and Key Metrics Changes - Approximately one-third of wholesale partner stores were closed due to COVID-19, while two-thirds were designated as essential businesses [13] - E-commerce operations experienced a strong spike in demand, particularly for work and Western footwear [15] Company Strategy and Development Direction - The company is focused on protecting employees and strengthening financial liquidity amid the pandemic [8] - Plans to adjust future receipts from third-party suppliers to align inventory with current demand [33] - The company aims to leverage its vertically integrated manufacturing structure to manage costs and inventory effectively [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of COVID-19 on sales and operations, particularly in the wholesale segment [12] - The company is confident in its ability to weather the current challenges and emerge well-positioned for future growth [24] - Management has withdrawn previous revenue guidance due to uncertainty created by the pandemic [34] Other Important Information - The company has eliminated approximately $1.5 million from its 2020 budget and identified potential additional savings of around $3 million [30] - Cash and cash equivalents at the end of Q1 2020 totaled $44.2 million, up from $17.6 million at the end of Q1 2019 [32] Q&A Session Summary Question: Rationale for excluding certain expenses - Management explained that the exclusion of approximately $1 million in expenses related to temporary facility closures was consistent with past practices and not indicative of future operations [37][38] Question: Trends in revenue over the last six weeks - Management noted that about a third of wholesale customers were shut down, while e-commerce sales had significantly increased [42][45] Question: Inventory management and future receipts - The company has delayed or canceled approximately $50 million in orders and is monitoring the situation closely [47] Question: Cost management and sales scenarios - Management discussed the complexity of forecasting sales and operating costs, indicating that the second quarter would likely be the toughest [62]