Summary of Rocky Brands Q2 2026 Earnings Call

1Key Financial Results and Metrics

Sales Growth: Q2 2026 net sales increased by 12% year-over-year to $118.4 million, surpassing expectations. This follows a 7.5% increase in Q2 2025.

Gross Profit: Reached $60.8 million, or 51.4% of sales, significantly up from 41.0% in the previous year, largely due to a tariff refund.

Net Income: Reported net income was $13.9 million ($1.83 per diluted share), compared to $3.6 million ($0.48 per diluted share) in Q2 2025. Adjusted net income was $14.4 million ($1.90 per share).

Operating Income: Increased to $19.7 million (16.6% of net sales) from $7.2 million (6.8% of net sales) year-over-year.

Debt: Reduced by 7.6% year-over-year to $122.4 million.

Inventory: Decreased by 7.1% year-over-year to $173.5 million, indicating effective management of discontinued styles.

2Strategic Updates and Business Highlights

Brand Performance:

XTRATUF: Fastest-growing brand with strong sales across wholesale and e-commerce, expected to exceed $100 million in revenue for the year.

Georgia Boot: Significant growth driven by expanded distribution and strong online sales.

Muck: Maintained momentum despite slight year-over-year sales decline due to timing issues with international distribution.

Durango: Sales aligned with expectations, impacted by last year's bulk buy orders.

Direct-to-Consumer (DTC): Strong performance noted, with increased investments in digital advertising to drive traffic and sales.

Tariff Refunds: Received a significant tariff refund that positively impacted gross margins and profitability.

3Forward Guidance and Outlook

Revenue Projection: Full-year revenue expected to increase by approximately 8.5% over 2025, with Q3 and Q4 anticipated to show modest growth.

Gross Margin Forecast: Expected to be around 40% for the year, with improvements in Q3 and Q4.

Earnings Per Share (EPS): Projected to be around $5 on a reported basis, with adjusted EPS similar to last year at $3.26.

Investment Plans: Plans to reinvest a portion of tariff refunds into the business and pay down debt.

4Bad News, Challenges, or Points of Concern

Input Costs: Rising costs for raw materials and freight due to oil price increases, impacting gross margins.

Tariff Uncertainty: New tariffs could pose future headwinds, with potential impacts expected to begin in late 2026 or early 2027.

Customer Bankruptcy: A $1.1 million write-off due to a customer bankruptcy affected operating expenses.

Operational Challenges: Sourcing challenges due to high demand have led to increased reliance on expedited shipping, impacting cost efficiency.

5Notable Q&A Insights

Sales Acceleration: Management noted broad-based growth across all brands, with particular strength in XTRATUF and DTC channels.

Shelf Space Gains: Significant gains in shelf space with major retailers, although some costs were incurred to secure these placements.

Future Pricing Strategy: Pricing actions will depend on the outcome of upcoming tariffs, with potential increases being evaluated for 2027.

Inventory Management: Effective management led to a clean inventory, with a significant reduction in discontinued items, although sourcing delays remain a concern. Overall, Rocky Brands demonstrated strong financial performance in Q2 2026, with positive growth across its brand portfolio, while also navigating challenges related to tariffs, input costs, and operational efficiencies. The company remains optimistic about its growth trajectory for the remainder of the year.