ROCKY BRANDS, INC. Q4 FY2024 earnings call

• Navigated microeconomic headwinds and lap business model changes in 2024. - Durango and XTRATUF were the top performers in Q4, with Durango clearing overstock and launching new products, XTRATUF having strong double-digit gains. - Retail segment's DTC channel had record sales volume, and wholesale sales returned to growth in Q4. - Increased marketing investments to boost brand awareness. - B2B Lehigh had double-digit sales growth for two quarters, with realigned sales organization driving results.

For the fourth quarter, Durango and XTRATUF were standouts. Durango had strong sell-through across key accounts and farm/ranch partners, with recent work to clear overstock and launch new products. XTRATUF had double-digit gains, strong in wholesale and e-comm, driven by holiday performance and new styles. Muck had solid performance in Q4 due to cold weather, though factory delays were a headwind. Georgia Boot saw a slight increase in Q4, with better boot weather and post-election clarity helping. Rocky had pockets of strength in DTC but was weighed down by promotional periods and inventory challenges. Retail's branded e-commerce and marketplace continued positive momentum, and B2B Lehigh had double-digit sales growth for two consecutive quarters. In terms of revenue contribution, Durango and XTRATUF were key drivers, with the retail segment's DTC channel having the highest ever sales volume quarter.

• Expect revenue to increase in the low single-digit range in 2025 over 2024's $453.8 million. - Gross margins expected to be modestly down from 39.4% in 2024 due to ~110 basis point headwind from tariffs. - SG&A expected to increase in dollars but similar as percentage of revenue. - Interest expense to decrease further. - EPS to be just below 2024's adjusted EPS of $2.54 but up ~20% excluding tariff impact. - Q1 sales expected to be flattish with last year, with growth in Q2 and more so in Q3 as inventory is back in stock.

• Consumer uncertainty causing retailers to be cautious with inventory commitments. - Tariffs on products sourced from China, expected to have a ~110 basis point impact on gross margins, with efforts underway to mitigate through price increases, vendor partnerships, and raw material adjustments.

Q: Could you clarify observations on mixed recent indicators and sell-through?

A: Tom Robertson and Jason Brooks said retailers are cautious but sell-through from retailers has been good, with weather later in Q4 and early 2025 helping.

Q: On 2025 revenue growth confidence and Q1 shaping?

A: Tom Robertson said order book and bookings are up year-over-year, but Q1 sales expected to be flattish with last year, growth in Q2 and Q3 as inventory is replenished.

Q: Tariff impact clarification and pricing actions?

A: Jason Brooks said tariffs are considered, evaluating price increases, vendor partnerships, and raw materials; impact expected in Q3 and Q4. Tom Robertson added ~110 basis point impact, some mitigation done, and monitoring peers' pricing.

Q: Update on sourcing exposure to Mexico and Q1 momentum?

A: Tom Robertson said sourcing from Mexico is less than a few percent, not meaningfully impacting business; Q1 has continued momentum with Muck, XTRATUF, and e-commerce strong but guidance cautious due to non-recurring sales and product shift.