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Rocky Brands Q3 sales up 12.3% to $74.8 mn

25
Oct '10
Rocky Brands, Inc. announced financial results for its third quarter ended September 30, 2010.

For the third quarter of 2010, net sales increased 12.3% to $74.8 million versus net sales of $66.6 million in the third quarter of 2009. Net income for the third quarter of 2010 increased $1.9 million to $4.7 million, or $0.63 per diluted share versus net income of $2.8 million, or $0.50 per diluted share a year ago.

Mike Brooks, Chairman and Chief Executive Officer, commented, “During the third quarter we continued to experience positive business trends similar to the first six months of 2010 which allowed us once again deliver improved profitability versus the year ago period. This included higher sales levels in both our wholesales and military segments, a 40 basis point increase in wholesale gross margin, and better operating expense leverage.

“We are particularly pleased with our wholesale growth which is being driven by demand for our work footwear. We also recently secured a new credit facility that will further reduce our interest expense approximately $2 million next year and free up capital to expand our business. Looking ahead, we are excited about both our near and long-term growth prospects and we are confident we have the right pieces in place to capitalize on the many opportunities still in front of us.”

Third Quarter Review
Net sales for the third quarter increased 12.3% to $74.8 million compared to $66.6 million a year ago. Wholesale sales for the third quarter increased 9.0% to $59.4 million compared to $54.5 million for the same period in 2009. The increase was driven primarily by growth of our work category. Retail sales for the third quarter were $11.1 million compared to $11.5 million for the same period last year. Military segment sales for the third quarter increased to $4.3 million versus $0.6 million for the same period in 2009.

Gross margin in the third quarter of 2010 was $27.2 million, or 36.4% of sales compared to $24.7 million, or 37.1% for the same period last year. The 70 basis point decline in gross margin was due to an increase in sales to the Military which carry lower gross margin than the wholesale and retail businesses.

Selling, general and administrative (SG&A) expenses were $19.2 million, or 25.6% of sales for the third quarter of 2010 compared to $18.6 million, or 27.9% of sales a year ago. The increase in SG&A expenses is primarily due to additional selling expenses and incentive accruals, which were partially offset by decreases in other expenses.

Income from operations increased 31.1% to $8.0 million, or 10.7% of net sales for the period compared to operating income of $6.1 million, or 9.2% of net sales in the prior year.

Interest expense decreased $1.0 million, or 50.0% to $1.0 million for the third quarter of 2010. The decrease is the result of debt reductions over the past 12 months combined with lower interest rates compared to the same period last year.


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