Summary of Rocky Brands, Inc. Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales: Increased by 9.1% year-over-year to $124.4 million.

Wholesale Sales: Grew 4.8% to $78.4 million.

Retail Sales: Increased 16.5% to $42.7 million.

Gross Profit: $45.4 million, representing 36.5% of sales, down from 41.2% a year ago due to higher tariffs.

Operating Income: $3.6 million (2.9% of sales), down from $8.7 million (7.6% of sales) in Q1 2025.

Net Income: $1.3 million, or $0.17 per diluted share, compared to $4.9 million, or $0.66 per diluted share in the prior year.

Adjusted Net Income: $1.8 million, or $0.24 per diluted share, down from $5.5 million, or $0.73 per diluted share in Q1 2025.

Debt: Decreased by 5% to $122.2 million; cash and cash equivalents at $1.7 million.

2Strategic Updates and Business Highlights

Product Performance: Strong sales driven by legacy styles and new product introductions, particularly in cold-weather offerings.

Brand Highlights:

XTRATUF: High-teen growth across all channels, strong performance from new product lines.

Muck: Best first quarter in three years, driven by favorable weather and strong inventory management.

Durango: Single-digit growth with notable performance in Texas and new product launches.

Georgia Boot: Slight decline due to timing of orders but strong digital sales growth.

Distribution Expansion: Increased partnerships with big-box retailers and specialty stores, particularly in the Western and outdoor segments.

3Forward Guidance and Outlook

2026 Revenue Guidance: Expected to increase approximately 6% over 2025.

Gross Margin Outlook: Anticipated to improve in Q2 but remain below 40% due to ongoing tariff impacts; expected to return to the 40% range in the second half of the year.

EPS Growth: Forecasted in the low-teen range for the year.

Tariff Impact: Approximately $10 million in higher tariffs expected to affect profitability in the first half of 2026.

4Bad News, Challenges, or Points of Concern

Tariff Headwinds: Higher tariffs significantly impacted gross margins, with a 470 basis point decline year-over-year.

Operating Income Decline: Reduced operating income due to increased costs and tariffs.

Commercial Military Segment: Slow recovery with no new government contracts observed, which remains a concern for future growth.

Freight and Product Costs: Rising freight costs and potential future price increases on oil-based materials could further pressure margins.

5Notable Q&A Insights

Consumer Demand: Management expressed optimism about consumer demand and order trends, particularly for the Muck and XTRATUF brands.

Surcharges and Costs: Higher freight fuel surcharges noted, with ongoing monitoring of logistics costs.

Order Book Confidence: Strong future orders across brands, especially rubber products, provide confidence for the second half of the year.

Tariff Refund Process: Management is pursuing approximately $20.5 million in tariff refunds, which could positively impact earnings if realized.

Retail Expansion: Potential new retail partnerships, including Boot Barn for XTRATUF, could enhance market presence. Overall, Rocky Brands, Inc. demonstrated solid sales growth in Q1 2026, although challenges from tariffs and operating income declines were notable concerns. The company remains optimistic about future growth driven by strong order trends and product innovation.