Rocky Brands ((RCKY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Rocky Brands’ recent earnings call conveyed a generally positive sentiment, highlighting a robust Q2 performance with significant revenue and earnings growth. The company demonstrated successful brand momentum, particularly in the Outdoor category, although it acknowledged challenges such as tariff-related pressures and modest declines in specific segments like Georgia Boot.
Strong Q2 Results
Rocky Brands delivered impressive Q2 results, significantly outperforming both last year and their own expectations. The company reported revenue growth in the high single digits, with adjusted earnings per share more than tripling to $0.55 per diluted share.
XTRATUF’s Accelerating Momentum
XTRATUF emerged as the fastest-growing brand within Rocky Brands, maintaining strong demand and expanding its distribution network. This brand has consistently built momentum over multiple quarters, contributing significantly to the company’s overall growth.
Operating Income Growth
The earnings call highlighted a substantial increase in operating income, which rose by 58.7% to $7.2 million, representing 6.8% of net sales. This growth marks a notable improvement from last year’s $4.5 million or 4.6% of net sales.
Debt Reduction and Interest Expense Decrease
Rocky Brands successfully reduced its total debt by 13.1% since June 30 of last year, resulting in a decrease in interest expenses to $2.5 million from $6.1 million. This reflects the company’s effective management of interest rates and debt levels.
Robust Outdoor Category Growth
The Outdoor category has reemerged as a key growth engine for Rocky Brands, with brands like XTRATUF and Muck driving performance and expanding their distribution reach.
Retail Net Sales Increase
Retail net sales saw a 13.9% increase, reaching $29.7 million. This growth was driven by strong direct-to-consumer sales and strategic marketing investments.
Georgia Boot’s Modest Decline
Despite a modest decline, Georgia Boot showed progressive improvement throughout the quarter, indicating potential for future recovery.
Tariff-Related Challenges
The company faced challenges due to tariffs, with approximately $11 million of incremental tariffs impacting financial performance. This remains a significant concern for Rocky Brands.
Retail Gross Margin Decline
Retail gross margins decreased by 170 basis points to 45.2%, highlighting some pressure on profitability in this segment.
Supply Chain and Tariff Pressures
Rocky Brands accelerated receipts in the first half of the year to mitigate the impact of higher tariffs but continued to face supply chain and tariff pressures.
Forward-Looking Guidance
During the earnings call, Rocky Brands provided updated guidance reflecting strong performance and strategic positioning for the remainder of the fiscal year. The company expects a 7.5% increase in reported net sales to $105.6 million, with Wholesale and Retail sales showing significant growth. Gross profit is projected to improve, and the company revised its full-year revenue growth forecast to 4%-5%, with an expected EPS rise of approximately 10% over last year’s $2.54 per share.
In summary, Rocky Brands’ earnings call painted a positive picture of the company’s current performance and future prospects. While challenges such as tariffs and specific brand declines persist, the overall sentiment was optimistic, driven by strong results, brand momentum, and strategic growth initiatives.