Rocky Brands, Inc. Q1 FY2026 earnings call

• Rocky Brands sustained strong sales momentum from the back half of 2025 into Q1 2026 with a 9% sales increase.
• Performance was driven by legacy styles, new product introductions, D2C growth, and improving wholesale trends.
• Extended winter weather benefited cold weather offerings, while spring collections gained traction.
• There was consistent full price selling with brick and mortar and digital partners.
• Strategic focus included expanding distribution, introducing new products at key price points, and leveraging technology platforms like BOA.
• Individual brand performances: Extra Tough had exceptional momentum, Muck had best first quarter in over three years, Durango had solid start, Georgia Boot rebounded, Rocky work outdoor and Western had positive results, commercial military and public service had solid start, B2B Lehigh business had strong momentum, and partnership with Volet Eyewear was strengthening

Extra Tough started 2026 with exceptional momentum, achieving high teen growth. U.S. wholesale was up low double digits, e-commerce and marketplace sales grew. Key products like the 15-inch Legacy Boot and Ankle Deck Boot series were top sellers, with broad-based distribution gains. Muck had its best first quarter in over three years, posting high teen growth across all channels. Arctic collections drove growth, and the new Rainscape spring collection contributed. The hardware business grew, and the sporting goods channel improved. Durango had a solid start with single-digit growth, strong in the Texas Hispanic market, and key account business with a major Western retailer up over 30%. Georgia Boot was challenging in January but rebounded in February and March, with digital channels up healthy double digits. Rocky work outdoor and Western had strengthening wholesale sales, with outdoor segments growing and new collections doing well. Commercial military and public service had a solid start with low single-digit growth. B2B Lehigh business continued strong momentum, and the partnership with Volet Eyewear was strengthening. Net sales for Q1 increased 9.1% to $124.4 million. Gross profit was $45.4 million, 36.5% of sales. Operating expenses were $41.8 million, 33.6% of net sales. Net income was $1.3 million, 17 cents per diluted share

• Reiterated full year 2026 guidance with revenue expected to increase ~6% over 2025, retail growing faster than wholesale.
• Gross margins forecasted to be down modestly from 2025's 40.9%, with ~$10 million in higher tariffs split 70-30 between Q1 and Q2.
• SG&A expected to be up in dollars but leveraged by ~80 basis points as a percentage of revenue.
• Interest expense to step down, EPS growth in low teen range.
• Q2 gross margins expected to improve from Q1 but to a lesser degree due to tariff timing shift, with Q2 EPS expected down ~20 cents vs last year.
• Anticipated tariff headwinds to be largely behind by Q2 exit, driving gross margins back above 40% and strong earnings growth in second half

• Higher tariffs impacting gross margins, with tariff uncertainty and fuel costs needing monitoring later in the year.
• Potential impacts from Section 301 investigations on future tariffs affecting guidance and financials

Q: What's your observation on the environment across brands, major partners, consumer demand and orders?

A: Felt positive with brands like Extra Tough, Muck, etc. doing well, commercial military had no U.S. government contracts yet, order book very strong for rest of year with no big change in consumer behavior Q: Talk about surcharges, freight and product costs?

A: Experienced higher freight fuel surcharges at end of Q1 and into Q2, monitoring closely; oil-based products and rubber compounds in shoes causing concern with potential price increases Q: Confidence in back half earnings growth?

A: Most confidence from strong order book with future orders across all brands, particularly rubber products, strong orders for Q3 and Q4 Q: Tariffs impact and refund?

A: Refund process started requesting ~$20.5 million, guidance assumes no refunds captured, future tariff impact of 122s at 10% monitored with Section 301 investigations in summer affecting guidance Q: Sell-in and sell-through trends?

A: Q4 had success, sell through at retail allowed retailers to book more for Q3 and Q4, product weighted to waterproof and insulated with good pre-books for fall across brands Q: Hispanic consumer in Texas?

A: Some areas in 2025 had slowed market, now retail partners seeing better sell-through in Texas Hispanic market Q: Tariff impact on earnings power?

A: Tariffs cost ~70 cents a share after tax in Q1, $20 million refund could add over $2 a share after tax, but variables and future tariffs like 301s complicate Q: Extra Tough at Boot Barn?

A: Slight expansion in Western retail category with potential opportunity, not just Boot Barn, slow in the area but positive