rcky20240930

rcky20240930_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-34382

ROCKY BRANDS, INC.

(Exact name of Registrant as specified in its charter)

Ohio		No. 31-1364046
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

39 East Canal Street, Nelsonville, Ohio 45764
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (740) 753‑9100

Title of class		Trading symbol		Name of exchange on which registered
Common Stock – No Par Value		RCKY		Nasdaq

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in 12b-2 of the Exchange Act.

	☐ Large accelerated filer	☒ Accelerated filer

	☐ Non-accelerated filer	☒ Smaller reporting company

		☐ Emerging growth company

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 7,453,814 shares of the Registrant's Common Stock outstanding on November 1, 2024.

Table of Contents

TABLE OF CONTENTS



		Page
PART I	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited), December 31, 2023, and September 30, 2023 (Unaudited)	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)	3
	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the NineMonths Ended September 30, 2024 and 2023 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21

PART II	Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
SIGNATURES		23

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

	September 30,		December 31,		September 30,
	2024		2023		2023
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	3,705	$	4,470	$	4,240
Trade receivables – net		77,130		77,028		97,844
Contract receivables		-		927		2,990
Other receivables		177		1,933		2,207
Inventories – net		171,847		169,201		194,734
Income tax receivable		-		1,253		2,445
Prepaid expenses		5,205		3,361		4,985
Total current assets		258,064		258,173		309,445
LEASED ASSETS		6,705		7,809		7,982
PROPERTY, PLANT & EQUIPMENT – net		50,380		51,976		53,124
GOODWILL		47,844		47,844		47,844
IDENTIFIED INTANGIBLES – net		110,521		112,618		113,321
OTHER ASSETS		1,503		965		1,015
TOTAL ASSETS	$	475,017	$	479,385	$	532,731

LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	63,148	$	49,840	$	62,733
Contract liabilities		-		927		2,990
Current portion of long-term debt		8,361		2,650		2,704
Accrued expenses and other liabilities		20,845		18,112		21,275
Total current liabilities		92,354		71,529		89,702
LONG-TERM DEBT		141,929		170,480		211,190
LONG-TERM TAXES PAYABLE		-		169		169
LONG-TERM LEASE		4,232		5,461		5,715
DEFERRED INCOME TAXES		7,475		7,475		8,006
DEFERRED LIABILITIES		777		716		1,179
TOTAL LIABILITIES		246,767		255,830		315,961
SHAREHOLDERS' EQUITY:
Common stock, no par value;
25,000,000 shares authorized; issued and outstanding September 30, 2024 - 7,449,020; December 31, 2023 - 7,412,480; September 30, 2023 - 7,366,201		73,537		71,973		70,757
Retained earnings		154,713		151,582		146,013
Total shareholders' equity		228,250		223,555		216,770
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	475,017	$	479,385	$	532,731

See Notes to Unaudited Condensed Consolidated Financial Statements

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
NET SALES	$	114,554		$	125,614		$	325,718		$	335,881
COST OF GOODS SOLD		70,908			79,076			199,886			208,012
GROSS MARGIN		43,646			46,538			125,832			127,869

OPERATING EXPENSES		33,575			32,259			103,271			107,233

INCOME FROM OPERATIONS		10,071			14,279			22,561			20,636

INTEREST EXPENSE AND OTHER – net		(3,180	)		(5,649	)		(13,964	)		(15,943	)

INCOME BEFORE INCOME TAX EXPENSE		6,891			8,630			8,597			4,693

INCOME TAX EXPENSE		1,612			1,803			2,011			980

NET INCOME	$	5,279		$	6,827		$	6,586		$	3,713

INCOME PER SHARE
Basic	$	0.71		$	0.93		$	0.89		$	0.50
Diluted	$	0.70		$	0.93		$	0.88		$	0.50

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Basic		7,449			7,366			7,432			7,355
Diluted		7,503			7,375			7,479			7,374

See Notes to Unaudited Condensed Consolidated Financial Statements

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands, except per share amounts)

(Unaudited)

	Common Stock and
	Additional Paid-in Capital							Total
	Shares				Retained			Shareholders'
	Outstanding		Amount		Earnings			Equity

BALANCE - December 31, 2022		7,339	$	69,752	$	145,721		$	215,473

NINE MONTHS ENDED SEPTEMBER 30, 2023
Net loss					$	(398	)	$	(398	)
Dividends paid on common stock ($0.155 per share)						(1,141	)		(1,141	)
Stock issued for options exercised, including tax benefits		1	$	8		-			8
Stock compensation expense		7		347		-			347
BALANCE - March 31, 2023		7,347	$	70,107	$	144,182		$	214,289

Net loss					$	(2,715	)	$	(2,715	)
Dividends paid on common stock ($0.155 per share)						(1,139	)		(1,139	)
Stock compensation expense		7	$	293		-			293
BALANCE - June 30, 2023		7,354	$	70,400	$	140,328		$	210,728

Net income					$	6,827		$	6,827
Dividends paid on common stock ($0.155 per share)						(1,142	)		(1,142	)
Stock issued for options exercised, including tax benefits		4	$	75		-			75
Stock compensation expense		8		282		-			282
BALANCE - September 30, 2023		7,366	$	70,757	$	146,013		$	216,770

BALANCE - December 31, 2023		7,412	$	71,973	$	151,582		$	223,555

NINE MONTHS ENDED SEPTEMBER 30, 2024
Net income					$	2,550		$	2,550
Dividends paid on common stock ($0.155 per share)						(1,149	)		(1,149	)
Stock compensation expense		5	$	339		-			339
BALANCE - March 31, 2024		7,417	$	72,312	$	152,983		$	225,295

Net loss					$	(1,243	)	$	(1,243	)
Dividends paid on common stock ($0.155 per share)						(1,151	)		(1,151	)
Stock issued for options exercised, including tax benefits		-	$	599		-			599
Stock compensation expense		6		312		-			312
BALANCE - June 30, 2024		7,423	$	73,223	$	150,589		$	223,812

Net income					$	5,279		$	5,279
Dividends paid on common stock ($0.155 per share)						(1,155	)		(1,155	)
Stock compensation expense		26	$	314		-			314
BALANCE - September 30, 2024	$	7,449	$	73,537	$	154,713		$	228,250

See Notes to Unaudited Condensed Consolidated Financial Statements

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Rocky Brands, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,586		$	3,713
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		7,805			8,251
Noncash lease expense		1,943			-
Loss on term loan extinguishment		1,111			-
Provision for bad debts		1,172			526
Stock compensation expense		965			922
Amortization of debt issuance costs and loan fees		454			640
Loss on disposal of assets		-			143
Gain on sale of business		-			(1,341	)
Change in assets and liabilities:
Receivables		(1,217	)		(3,015	)
Contract receivables		927			(2,990	)
Inventories		(2,646	)		34,502
Other current assets		(1,843	)		(918	)
Other assets		(131	)		2,959
Accounts payable		12,363			(8,396	)
Operating lease liability		(1,931	)		-
Accrued and other liabilities		2,150			(3,315	)
Income taxes

SEC Form 10-Q filed by Rocky Brands Inc.