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ROCKY BRANDS, INC. (RCKY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales rose 1.7% to $128.1M; gross margin expanded 120 bps to 41.5%, with Retail hitting its highest-ever quarterly sales and adjusted EPS increasing to $1.19, up from $0.98 YoY .
  • GAAP EPS was $0.64 (vs. $0.91 LY) due to a $4.0M non‑cash trademark impairment; adjusted net income rose 22.7% to $8.9M as interest expense fell to $3.0M on lower debt after April 2024 refinancing .
  • FY 2024 debt fell 25.7% YoY to $128.7M; Board authorized a new $7.5M share repurchase and declared a $0.155 quarterly dividend payable March 17, 2025, adding capital return and potential stock support catalysts .
  • 2025 outlook: revenue low single-digit growth vs. $453.8M, gross margin down modestly (~110 bps tariff headwind), SG&A similar % of revenue, lower interest expense; tax rate normalizes to ~22–23% and EPS expected just below FY2024 adjusted $2.54 (ex‑tariffs ~20% higher) .
  • Wall Street consensus (S&P Global) could not be retrieved during this session; comparisons to estimates are unavailable. If you want, we can re‑run S&P Global pulls for consensus EPS/revenue after system limits reset.

What Went Well and What Went Wrong

What Went Well

  • Retail sales +15.3% to $43.6M; “highest ever sales quarter” for the Retail segment, driven by strong DTC momentum and targeted promotions; Durango and XTRATUF delivered double-digit gains and record December months .
  • Gross margin +120 bps to 41.5%; Wholesale margin +310 bps to 38.5%, aided by mix shift and improved pricing; interest expense declined to $3.0M on refinancing and lower debt .
  • Balance sheet strengthened: total debt down 25.7% YoY to $128.7M; inventory down 1.5% YoY and 3.0% sequentially, enabling more aggressive inventory positioning in 2025 (XTRATUF, Muck) .

What Went Wrong

  • GAAP operating income declined to $8.5M (from $14.7M LY) and GAAP EPS to $0.64 (from $0.91), primarily due to a $4.0M trademark impairment and higher SG&A (marketing/logistics/incentives) .
  • Wholesale segment sales –5.2% to $81.3M (up 4.5% recurring), pressured by holiday promotions and partner inventory challenges; Rocky Outdoor was impacted by mild hunting weather and a narrow selling window .
  • Retail gross margin –370 bps to 49.2% as marketplace channel was used to clear discontinued/slow‑moving product, trading off margin for profitable inventory rationalization .

Financial Results

Quarterly Performance (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$98.258 $114.554 $128.054
Gross Margin ($USD Millions)$38.038 $43.646 $53.178
Gross Margin (%)38.7% 38.1% 41.5%
Operating Income ($USD Millions)$4.508 $10.071 $8.504
Net Income ($USD Millions)$(1.243) $5.279 $4.801
Diluted EPS ($USD)$(0.17) $0.70 $0.64
Adjusted Net Income ($USD Millions)$1.276 $5.809 $8.926
Adjusted Diluted EPS ($USD)$0.17 $0.77 $1.19

Q4 Year-over-Year

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$125.952 $128.054
Gross Margin ($USD Millions)$50.729 $53.178
Gross Margin (%)40.3% 41.5%
Operating Income ($USD Millions)$14.736 $8.504
Net Income ($USD Millions)$6.712 $4.801
Diluted EPS ($USD)$0.91 $0.64
Adjusted Net Income ($USD Millions)$7.274 $8.926
Adjusted Diluted EPS ($USD)$0.98 $1.19

Segment Sales (oldest → newest)

Segment Sales ($USD Millions)Q2 2024Q3 2024Q4 2024
Wholesale$68.3 $84.0 $81.3
Retail$26.1 $26.8 $43.6
Contract Manufacturing$3.9 $3.8 $3.2

Segment Margins (Q4 2024)

KPIQ4 2024
Wholesale Gross Margin (%)38.5%
Retail Gross Margin (%)49.2%
Contract Manufacturing Gross Margin (%)14.8%

Balance Sheet & Other KPIs (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Inventory ($USD Millions)$174.973 $171.847 $166.701
Total Debt ($USD Millions)$152.4 $150.3 $128.7
Interest Expense ($USD Millions)$6.131 $3.180 $3.043

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Not previously quantifiedLow single-digit growth vs $453.8M FY2024 Initiated
Gross MarginFY 2025Not previously quantifiedDown modestly YoY; ~110 bps headwind from higher China tariffs Lowered
SG&A (% of revenue)FY 2025Not previously quantifiedSimilar to FY2024; dollars up on marketing/logistics Maintained (mix)
Interest ExpenseFY 2025Not previously quantifiedDown vs FY2024 on lower debt/rates Lowered
Tax RateFY 2025Not previously quantified~22–23% (vs. 19% in FY2024) Raised vs FY2024 actual
EPSFY 2025Not previously quantifiedJust below FY2024 adjusted $2.54; ~20% higher ex‑tariff impact Slightly lower (reported)
Q1 SalesQ1 2025Not previously quantified“Flattish” YoY; spring product shift to Q2; slight wholesale margin improvement Initiated
Capital Return2025N/A$7.5M share repurchase authorization; quarterly dividend $0.155 declared Feb. 18, 2025 New/maintained dividend

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Consumer/macroCautious consumer; weather headwinds; softness seen as transitory Retail partners cautious despite strong sell‑through; guidance conservative Caution persists; sell‑through solid
TariffsNot highlighted in Q2/Q3 releases10% increase on China‑sourced products; ~110 bps GM headwind; pricing/vendor/material mitigation underway New headwind; mitigation actions in progress
Sourcing/supply chainInventory reduction; debt refi; improved channel inventories Accelerating shift to Vietnam/Cambodia/DR; reduce China to <35% by YE 2025; more aggressive inventory for Muck/XTRATUF Diversification, proactive inventory positioning
Product performanceDurango/XTRATUF double‑digit gains; Lehigh strength Durango & XTRATUF standout; Muck strong on cold weather; women/kids ~40% of XTRATUF sales Broadening growth; category expansion
Retail segmentRetail +4–12% earlier; DTC momentum Retail +15.3% to record quarter; marketplace used to clear inventory at reasonable margins Acceleration with margin trade‑off
Capital structureDebt down 31–30% YoY; refi saves ~$4.4M beginning 2025 Debt down 25.7% YoY; new $7.5M buyback authorized Continued de‑leveraging; shareholder returns

Management Commentary

  • “Our sales trends accelerated as the holiday season progressed led by strong consumer demand for our Durango and XTRATUF brands, with particular strength in our direct to consumer channel which fueled our highest ever sales quarter for our Retail reporting segment.” — Jason Brooks, CEO .
  • “Gross profit was $53.2 million or 41.5% of net sales… wholesale, up 310 basis points to 38.5%; Retail gross margins were down 370 basis points to 49.2%.” — Tom Robertson, COO & CFO .
  • “We are facing pressure from the 10% increase in tariffs on products sourced from China… anticipate total goods coming from China to be below 35% by the end of 2025.” — Tom Robertson .
  • “We plan to make further incremental investments [in marketing]… to increase brand awareness and drive traffic to our sites and our wholesale partner doors.” — Jason Brooks .

Q&A Highlights

  • Guidance cadence: Bookings up YoY; Q1 sales flattish with spring deliveries shifting to Q2; increases more in Q2/Q3 as inventory replenishes; slight wholesale margin improvement with end of non‑recurring military contract .
  • Tariff impact/mitigation: 110 bps gross margin headwind ($5M implied); mitigation via selective price increases, vendor support, raw materials, and sourcing diversification across Asia/DR; pricing actions observed among peers .
  • Growth drivers: XTRATUF (women/kids expansion), Muck bookings, Durango strength (Boot Barn partnership), and select casual/work innovations (e.g., BOA work boot) alongside Lehigh double‑digit growth from sales force realignment .
  • Mexico exposure: Very small sourcing (<“few percent”) in exotic western; any 25% tariff would hurt peers more; resourcing options evaluated .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and Q1 2025 could not be retrieved in this session due to system limits; therefore, beat/miss analysis versus Street is unavailable at this time. We can re‑run S&P Global pulls for “Primary EPS Consensus Mean” and “Revenue Consensus Mean” once access resets and update the tables accordingly.

Key Takeaways for Investors

  • Retail momentum and DTC execution are key positives; the segment’s record quarter and targeted promotions suggest sticky demand into 1H25 despite retailer ordering caution .
  • Mix and pricing improvements lifted Wholesale margins; continued margin discipline could offset some tariff pressure as sourcing diversifies and selective pricing actions take effect .
  • Balance sheet progress (debt –25.7% YoY) plus lower interest expense supports EPS resiliency against tariff headwinds; the $7.5M buyback adds flexibility for capital returns .
  • 2025 narrative: low single‑digit revenue growth, modest margin compression from tariffs, SG&A mix shifting to growth investments; EPS just below FY2024 adjusted on reported basis but ~20% higher excluding tariff impact .
  • Short‑term trading: watch tariff mitigation (pricing/vendor/materials), Q1/Q2 cadence shifts, and DTC/marketplace contribution to margins; buyback/dividend could underpin shares on pullbacks .
  • Medium‑term thesis: brand breadth (Durango, XTRATUF, Muck), women/kids expansion, and Lehigh B2B traction support recurring growth; sourcing diversification to <35% China by YE25 is a structural tailwind to risk management .
  • Re‑check consensus to calibrate near‑term expectations; if Street underweights tariff mitigation or retail momentum, estimate revisions could trend positively as mitigation actions flow through in 2H25.