Rocky Brands次季淨銷售增12% 關稅退款帶動毛利率升至51.4%

rcky20260630_10q.htm
 
 
 
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false
--12-31
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no
no
no
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25,000,000
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7,487,899
7,487,899
7,505,139
7,505,139
7,461,167
7,461,167
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0.155
0.17
3
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0
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161,770
169,710
18,776
16,313
181,134
186,836
0.7
1.4
http://www.rockybrands.com/20260630#AccruedLiabilitiesAndOtherCurrentLiabilities
http://www.rockybrands.com/20260630#AccruedLiabilitiesAndOtherCurrentLiabilities
http://www.rockybrands.com/20260630#AccruedLiabilitiesAndOtherCurrentLiabilities
7.00
7.50
7.69
5.51
5.62
6.22
7.18
7.16
7.94
0
0
0
3
false
false
false
false
Relates to the impairment of the Muck brand for the year ended December 31, 2024. 

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 Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

OR

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number: 001-34382

 

 

 

ROCKY BRANDS, INC.

(Exact name of Registrant as specified in its charter)

 

 Ohio
   No. 31-1364046
 

 (State or other jurisdiction of incorporation or organization)
   (I.R.S. Employer Identification No.)
 

   

 39 East Canal Street, Nelsonville, Ohio 45764
 

 (Address of principal executive offices, including zip code)
 

   

 Registrant's telephone number, including area code: (740) 753‑9100
 

 

 Title of class
   Trading symbol
   Name of exchange on which registered
 

 Common Stock – No Par Value
   RCKY
   Nasdaq
 

 

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in 12b-2 of the Exchange Act.

 

 ☐ Large accelerated filer☒ Accelerated filer

   

 ☐ Non-accelerated filer☒  Smaller reporting company

   

  ☐ Emerging growth company

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

 

There were 7,491,911 shares of the Registrant's Common Stock outstanding on July 31, 2026.

 

 
 
 
  
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

 
  
 

 
  
 

 
 TABLE OF CONTENTS

  

 
 
 
  
  
  
 

 
  
  
  
 

 
  
  
 Page 
 
 

 
 PART I
 
 Financial Information
 
  
 

 
 Item 1.
 
 Financial Statements
  
 

 
  
 Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited), December 31, 2025, and June 30, 2025 (Unaudited)
 
 2
 
 

 
  
 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
 
 3
 
 

 
  
 Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)
 
 4
 
 

 
  
 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited)
 
 5
 
 

 
  
 Notes to Unaudited Condensed Consolidated Financial Statements
 
 6
 
 

 
 Item 2.
 
 Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 14
 
 

 
 Item 3.
 
 Quantitative and Qualitative Disclosures About Market Risk
 
 22
 
 

 
 Item 4.
 
 Controls and Procedures
 
 22
 
 

 
  
 
  
 
  
 

 
 PART II
 Other Information
  
 
 

 
 Item 2.
 
 Unregistered Sales of Equity Securities and Use of Proceeds
 
 22
 
 

 
 Item 5. 
 Other Information
 22
 

 
 Item 6.
 
 Exhibits
 
 23
 
 

 
 SIGNATURES 
 24
 
 

 
 
  

 
 
 
 
 1
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

   

 

 
  
 

 PART I – FINANCIAL INFORMATION

 ITEM 1 – FINANCIAL STATEMENTS

 Rocky Brands, Inc. and Subsidiaries

 Condensed Consolidated Balance Sheets

 (In thousands, except share amounts)

 (Unaudited)

  

 
    June 30,
    December 31,
    June 30,
  

   2026
    2025
    2025
  

 ASSETS:
             

 CURRENT ASSETS:
             

 Cash and cash equivalents
  $2,627  $2,902  $2,779 

 Trade receivables – net
   76,887   77,055   66,367 

 Other receivables
   20,084   4,952   142 

 Inventories – net
   173,525   181,134   186,836 

 Income tax receivable
   -   1,050   - 

 Prepaid expenses
   5,506   3,623   5,345 

 Total current assets
   278,629   270,716   261,469 

 LEASED ASSETS
   7,497   4,175   4,724 

 PROPERTY, PLANT & EQUIPMENT – net
   52,360   49,929   50,908 

 GOODWILL
   47,844   47,844   47,844 

 IDENTIFIED INTANGIBLES – net
   101,639   103,033   104,428 

 OTHER ASSETS
   1,939   1,791   1,647 

 TOTAL ASSETS
  $489,908  $477,488  $471,020 

             

 LIABILITIES AND SHAREHOLDERS' EQUITY:
             

 CURRENT LIABILITIES:
             

 Accounts payable
  $58,747  $52,958  $61,483 

 Current portion of long-term debt
   8,361   8,361   8,361 

 Accrued expenses and other liabilities
   26,759   34,813   24,931 

 Total current liabilities
   93,867   96,132   94,775 

 LONG-TERM DEBT
   114,030   114,281   124,167 

 LONG-TERM LEASES
   5,110   1,727   2,156 

 DEFERRED INCOME TAXES
   12,381   12,381   10,044 

 DEFERRED LIABILITIES
   888   879   813 

 TOTAL LIABILITIES
   226,276   225,400   231,955 

 SHAREHOLDERS' EQUITY:
             

 Common stock, no par value;
   -   -   - 

 25,000,000 shares authorized; issued and outstanding June 30, 2026 - 7,487,899; December 31, 2025 - 7,505,139; June 30, 2025 - 7,461,167
             

 Additional paid-in-capital
   74,935   76,090   74,470 

 Retained earnings
   188,697   175,998   164,595 

 Total shareholders' equity
   263,632   252,088   239,065 

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $489,908  $477,488  $471,020 

 

  

 See Notes to Unaudited Condensed Consolidated Financial Statements

  

 
 
 
 
 2
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

  

 Rocky Brands, Inc. and Subsidiaries

 Condensed Consolidated Statements of Operations

 (In thousands, except per share amounts)

 (Unaudited)

  

 
    Three Months Ended
    Six Months Ended
  

   June 30,
    June 30,
  

   2026
    2025
    2026
    2025
  

 NET SALES
  $118,368  $105,647  $242,769  $219,720 

 COST OF GOODS SOLD
   57,564   62,366   136,531   129,431 

 GROSS MARGIN
   60,804   43,281   106,238   90,289 

                 

 OPERATING EXPENSES
   41,119   36,125   82,919   74,427 

                 

 INCOME FROM OPERATIONS
   19,685   7,156   23,319   15,862 

                 

 INTEREST EXPENSE AND OTHER – net
   (1,995)  (2,519)  (4,029)  (4,874)

                 

 INCOME BEFORE INCOME TAX EXPENSE
   17,690   4,637   19,290   10,988 

                 

 INCOME TAX EXPENSE
   3,809   1,029   4,151   2,438 

                 

 NET INCOME
  $13,881  $3,608  $15,139  $8,550 

                 

 INCOME PER SHARE
                 

 Basic
  $1.85  $0.48  $2.01  $1.15 

 Diluted
  $1.83  $0.48  $1.99  $1.14 

                 

 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                 

                 

 Basic
   7,509   7,461   7,522   7,460 

 Diluted
   7,598   7,493   7,607   7,493 

 

  

 See Notes to Unaudited Condensed Consolidated Financial Statements

  

 
 
 
 
 3
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

  

 Rocky Brands, Inc. and Subsidiaries

 Condensed Consolidated Statements of Shareholders’ Equity

 (In thousands, except per share amounts)

 (Unaudited)

  

 
    Common Stock and
          

   Additional Paid-in Capital
        Total
  

   Shares
        Retained
    Shareholders'
  

   Outstanding
    Amount
    Earnings
    Equity
  

                 

 BALANCE - December 31, 2024
   7,454  $73,866  $158,358  $232,224 

                 

 SIX MONTHS ENDED JUNE 30, 2025
                 

 Net income
         $4,941  $4,941 

 Dividends paid on common stock ($0.155 per share)
          (1,156)  (1,156)

 Repurchase of common stock
   (10) $(201)  -   (201)

 Stock issued for options exercised, including tax benefits
   1   19   -   19 

 Stock-based compensation
   7   386   -   386 

 BALANCE - March 31, 2025
   7,452  $74,070  $162,143  $236,213 

                 

 Net loss
         $3,608  $3,608 

 Dividends paid on common stock ($0.155 per share)
          (1,156)  (1,156)

 Stock compensation expense
   9   400   -   400 

 BALANCE - June 30, 2025
   7,461  $74,470  $164,595  $239,065 

                 

 BALANCE - December 31, 2025
   7,505  $76,090  $175,998  $252,088 

                 

 SIX MONTHS ENDED JUNE 30, 2026
                 

 Net income
         $1,259  $1,259 

 Dividends paid on common stock ($0.155 per share)
          (1,169)  (1,169)

 Restricted stock awards issued, net of tax withholding obligations
   25   (89)  -   (89)

 Stock-based compensation
   6   455   -   455 

 BALANCE - March 31, 2026
   7,536  $76,456  $176,088  $252,544 

                 

 Net income
         $13,881  $13,881 

 Dividends paid on common stock ($0.17 per share)
          (1,272)  (1,272)

 Repurchase of common stock
   (54) $(1,990)  -   (1,990)

 Stock issued for options exercised, including tax benefits
   1   14   -   14 

 Stock compensation expense
   5   455   -   455 

 BALANCE - June 30, 2026
   7,488  $74,935  $188,697  $263,632 

 

  

 See Notes to Unaudited Condensed Consolidated Financial Statements

  

 
 
 
 
 4
 

 

 

 
 
 
 
 Table of Contents
 

 

 

 

  

 
  
 

  

 Rocky Brands, Inc. and Subsidiaries

 Condensed Consolidated Statements of Cash Flows

 (In thousands)

 (Unaudited)

  

 
    Six Months Ended
  

   June 30,
  

   2026
    2025
  

 CASH FLOWS FROM OPERATING ACTIVITIES:
         

 Net income
  $15,139  $8,550 

 Adjustments to reconcile net income to net cash provided by operating activities:
         

 Depreciation and amortization
   4,900   4,825 

 Noncash lease expense
   1,385   1,363 

 Stock compensation expense
   910   786 

 Provision for bad debts
   1,539   434 

 Amortization of debt issuance costs and loan fees
   363   327 

         

 Change in assets and liabilities:
         

 Receivables
   (16,502)  6,068 

 Inventories
   2,644   (20,134)

 Other current assets
   (1,883)  (2,338)

 Other assets
   (109)  (70)

 Accounts payable
   4,680   2,614 

 Operating lease liability
   (1,466)  (1,402)

 Accrued and other liabilities
   (5,024)  710 

 Income taxes
   3,135   309 

 Net cash provided by operating activities
   9,711   2,042 

         

 CASH FLOWS FROM INVESTING ACTIVITIES:
         

 Purchase of fixed assets
   (4,826)  (3,872)

 Net cash used in investing activities
   (4,826)  (3,872)

         

 CASH FLOWS FROM FINANCING ACTIVITIES:
         

 Proceeds from revolving credit facility
   22,919   23,710 

 Repayments on revolving credit facility
   (19,250)  (16,000)

 Repayments on term loan
   (4,181)  (4,181)

 Payments of debt issuance costs and loan fees
   (142)  (145)

 Proceeds from stock options
   16   19 

 Taxes paid related to net shares settlement of equity awards
   (91)  - 

 Repurchase of common stock
   (1,990)  (201)

 Dividends paid on common stock
   (2,441)  (2,312)

 Net cash (used in) provided by financing activities
   (5,160)  890 

         

 DECREASE IN CASH AND CASH EQUIVALENTS
   (275)  (940)

         

 CASH AND CASH EQUIVALENTS:
         

 BEGINNING OF PERIOD
   2,902   3,719 

 END OF PERIOD
  $2,627  $ 2,779
  
 

 

  

 See Notes to Unaudited Condensed Consolidated Financial Statements

  

 
 
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 Rocky Brands, Inc. and Subsidiaries

  

 Notes to Unaudited Condensed Consolidated Financial Statements 

 (in thousands, except per share amounts)

  

 
 
  
 

 
 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

  

 We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including The Original Muck Boot Company ("Muck"), XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, Ranger, and the licensed brand Michelin. Our brands have a long history of representing high quality, comfortable, functional, and durable footwear and our products are organized around six target markets: work, outdoor, western, commercial military, duty, and military. In addition, as part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands.

  

 The accompanying Unaudited Condensed Consolidated Financial Statements reflect all adjustments that are necessary for a fair presentation of the financial results. All such adjustments reflected in the Unaudited Condensed Consolidated Financial Statements are considered to be of normal and recurring nature. The results of operations for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of the results to be expected for the whole year. The  December 31, 2025 Unaudited Condensed Consolidated Balance Sheet data was derived from the audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). This Quarterly Report on Form 10-Q should be read in connection with our Annual Report on Form 10-K for the year ended  December 31, 2025, which includes all disclosures required by GAAP.

  

 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

  

 Reclassifications

  

 We have reclassified certain amounts in prior periods in Note 8 - Accrued Expenses and Other Liabilities to conform to current period presentation.

 
 
  
 

 
 2. ACCOUNTING STANDARDS UPDATES

  

 
Recently Issued Accounting Pronouncements

  

 Rocky Brands, Inc. is currently evaluating the impact of certain ASUs on its Unaudited Condensed Consolidated Financial Statements:

  

 Standard
   Description
   Anticipated Adoption Periods
   Effect on Consolidated Financial Statements
 

 ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
   This pronouncement requires disclosure of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements.
   Q4 2027 (fiscal year) Q1 2028 (interim period)
   The Company is still assessing the impact of the new accounting standard on its consolidated financial statements.
 

ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements This pronouncement improves the navigability of the required interim disclosure and provides clarification around the principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. Q4 2027 (fiscal year) Q1 2028 (interim period) The Company is still assessing the impact of the new accounting standard on its consolidated financial statements.

ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software This pronouncement modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages. The new standard requires entities to consider whether significant development uncertainty has been resolved before starting to capitalize software costs and enhances disclosure requirements. Q4 2028 (fiscal year) Q1 2029 (interim period) The Company is still assessing the impact of the new accounting standard on its consolidated financial statements.

  

 Accounting Standards Adopted in the Prior Year

  

 Standard
   Description
   Effect on Consolidated Financial Statements
 

 ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
   This pronouncement requires expanded income tax disclosures primarily related to an entity's effective tax rate reconciliation and income taxes paid.
   The Company has included all required disclosures within its Form 10-K for the year ended December 31, 2025. See Note 10 - Taxes for further information on income taxes.
 

  

  

 
 
 
 
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 3. FAIR VALUE

  

 The fair value accounting standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This standard clarifies how to measure fair value as permitted under other accounting pronouncements.

  

 The fair value accounting standard defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This standard also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

  

   ●
 Level 1 – Quoted prices in active markets for identical assets or liabilities.
 

  

   ●
 Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
 

  

   ●
 Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
 

  

 The fair values of cash and cash equivalents, receivables, and payables approximate their carrying values because of the short-term nature of these instruments. Receivables consist primarily of amounts due from our customers, net of allowances, expected insurance recoveries, and expected IEEPA tariff refunds. The carrying amounts of our long-term credit facilities and other short-term financing obligations also approximate fair value, as they are comparable to financing in the third-party marketplaces due to their variable interest rate terms. Our long-term credit facilities and short-term financing obligations are classified as Level 2. 

  

 We hold assets and liabilities in a separate trust in connection with deferred compensation plans. The deferred compensation assets are classified as trading securities within other assets and the deferred compensation liabilities are classified within deferred liabilities in the accompanying Consolidated Balance Sheet. The fair value of these assets is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency and are therefore classified as Level 1.

  

 Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets primarily include property, plant, and equipment, operating lease assets, definite-lived intangibles, and goodwill and other indefinite-lived intangible assets that are reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. There was no impairment charge for such assets recorded during the six months ended June 30, 2026 and 2025.

 
 
  
 

 
 4. REVENUE

  

 Nature of Performance Obligations

  

 Our products are distributed through three distinct channels, which represent our business segments: Wholesale, Retail, and Contract Manufacturing. In our Wholesale business, we distribute our products through a wide range of distribution channels representing over 10,000 retail store locations in the U.S., the U.K., and other international markets such as Europe. Our Wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers, and online retailers. Our Retail business includes direct sales of our products to consumers through our business-to-business web platform, e-commerce websites, third-party marketplaces, and our Rocky Outdoor Gear Store. Our Contract Manufacturing segment includes sales to the U.S. Military, private label sales, and any sales to customers in which we are contracted to manufacture or source a specific footwear product for a customer.

  

 Significant Accounting Policies and Judgments

  

 Revenue is recognized when the performance obligations under the terms of a contract with our customer are satisfied. The performance obligation is satisfied, and revenue is recorded when control passes to the customer, which is generally upon shipment to the customer or at the time of sale for our retail store customers. Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of our products, which is the net sales price.

  

 The net sales price includes estimates of variable consideration for which reserves may be established. Components of variable consideration include discounts and allowances, customer rebates, markdowns, and product returns. These reserves are based on the amounts earned, or to be claimed, on the related sales of our products.

  

 Elements of variable consideration including discounts, allowances, and rebates are determined at contract inception and are reassessed at each reporting date, at a minimum, to reflect any change in the types of variable consideration offered to the customer. We determine estimates of variable consideration based on evaluations of each type of variable consideration and customer contract, historical and anticipated trends, and current economic conditions. Overall, these reserves reflect our best estimates of the amount of consideration to be earned on the related sales. Actual amounts of consideration ultimately received  may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net revenue and earnings in the period such variances become known.

  

 Our estimated sales returns are based on historical customer return data and known or anticipated returns not yet received from customers. Actual returns in any future period are inherently uncertain and thus  may differ from estimates recorded. If actual or expected future returns are significantly higher or lower than the established reserves, a reduction or increase to net revenues is recorded in the period in which the determination is made.

  

 
 
 
 
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 From time to time, we enter into non-cancellable contracts with the U.S. Military and other customers with a duration of one year or less. The contractual minimum payments under such contracts may result in current contract receivable balances. 

  

 Current contract liabilities are performance obligations that we expect to satisfy or relieve within the next twelve months, advance consideration obtained prior to satisfying a performance obligation, or unconditional obligations to provide goods or services under non-cancellable contracts before the transfer of goods or services to the customer has occurred. 

  

 As of June 30, 2026,  December 31, 2025 and  June 30, 2025, there were no contract receivable or contract liability balances outstanding.

  

 Disaggregation of Revenue

  

 All revenues are recognized at a point in time when control of our products pass to the customer at point of shipment or point of sale for retail store customers. Because all revenues are recognized at a point in time and are disaggregated by channel, our segment disclosures are consistent with disaggregation requirements. See Note 13 - Segment Information for segment disclosures.

 
 
  
 

 
 5. TRADE RECEIVABLES

  

 We maintain an allowance for credit losses resulting from the inability of our customers to make required payments. We calculate the allowance based on historical experience, the age of the receivables, receivable insurance status, and identification of customer accounts that are likely to prove difficult to collect due to various criteria including pending bankruptcy. Estimates of the allowance in any future period are inherently uncertain and actual allowances  may differ from these estimates. If actual or expected future allowances were significantly greater or less than established reserves, a reduction or increase to bad debt expense would be recorded in the period this determination was made. Our credit policy generally provides that trade receivables will be deemed uncollectible and written off once we have pursued all reasonable efforts to collect on the account. Trade receivables are presented net of the related allowance for credit losses of approximately $0.8 million, $0.7 million, and $0.8 million at June 30, 2026,  December 31, 2025, and  June 30, 2025, respectively. 

   

 
 
 
 
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 6. INVENTORY

  

 Inventories are comprised of the following:

  

 
    June 30,
    December 31,
    June 30,
  

 ($ in thousands)
   2026
    2025
    2025
  

 Finished goods
  $149,466  $161,770  $169,710 

 Raw materials
   22,943   18,776   16,313 

 Work-in-process
   1,116   588   813 

 Total
  $173,525  $181,134  $186,836 

 
  

 The asset associated with our returns reserve included within inventories was approximately $0.9 million, $1.1 million, and $0.9 million as of  June 30, 2026, December 31, 2025, and June 30, 2025, respectively.

 
 
  
 

 
 7. GOODWILL & IDENTIFIED INTANGIBLE ASSETS 

  

 There was no change in goodwill during the six months ended June 30, 2026.

  

 Intangible assets other than goodwill at the respective balance sheet dates consisted of the following:

  

 
    June 30, 2026
  

   Gross
    Accumulated
    Accumulated
    Carrying
  

 ($ in thousands)
   Amount
    Amortization
    Impairment(1)
    Amount
  

 Indefinite-lived intangible assets
                 

 Trademarks
  $78,654      $(4,000) $74,654 

 Intangible assets subject to amortization
                 

 Patents
   895  $(879)  -   16 

 Customer relationships
   41,659   (14,690)  -   26,969 

 Total intangible assets other than goodwill
  $121,208  $(15,569) $(4,000) $101,639 

 
  

 (1) Relates to the impairment of the Muck brand for the year ended December 31, 2024. 

  

 
    December 31, 2025
  

   Gross
    Accumulated
    Accumulated
    Carrying
  

 ($ in thousands)
   Amount
    Amortization
    Impairment(1)
    Amount
  

 Indefinite-lived intangible assets
                 

 Trademarks
  $78,654      $(4,000) $74,654 

 Intangible assets subject to amortization
                 

 Patents
   895  $(875)  -   20 

 Customer relationships
   41,659   (13,300)  -   28,359 

 Total intangible assets other than goodwill
  $121,208  $(14,175) $(4,000) $103,033 

 
  

 (1) Relates to the impairment of the Muck brand for the year ended December 31, 2024. 

  

 
    June 30, 2025
  

   Gross
    Accumulated
    Accumulated
    Carrying
  

 ($ in thousands)
   Amount
    Amortization
    Impairment(1)
    Amount
  

 Indefinite-lived intangible assets
                 

 Trademarks
  $78,654      $(4,000) $74,654 

 Intangible assets subject to amortization
                 

 Patents
   895  $(868)  -   27 

 Customer relationships
   41,659   (11,912)  -   29,747 

 Total intangible assets other than goodwill
  $121,208  $(12,780) $(4,000) $104,428 

 
  

 (1) Relates to the impairment of the Muck brand for the year ended December 31, 2024. 

  

 
 
 
 
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 The weighted average remaining life of patents and customer relationships is 2.0 years and 9.8 years, respectively.

  

 Amortization expense for intangible assets subject to amortization for each of the three months ended June 30, 2026 and 2025 was $0.7 million. Amortization expense for intangible assets subject to amortization for the six months ended June 30, 2026 and 2025 was $1.4 million.

  

 As of June 30, 2026, a schedule of approximate expected remaining amortization expense related to intangible assets for the years ending December 31 is as follows:

  

 
     Amortization
  

 ($ in thousands)
 Year
   Expense
  

  2026
  $1,394 

  2027
   2,785 

  2028
   2,781 

  2029
   2,779 

  2030
   2,778 

  2031+
   14,468 

  Total
  $26,985 

 
  

 
 
  
 

 
 8. ACCRUED EXPENSES AND OTHER LIABILITIES

  

 Amounts reported in "Accrued expenses and other liabilities" within the accompanying Unaudited Condensed Consolidated Balance Sheets were:

  

 
    June 30,
    December 31,
    June 30,
  

 ($ in thousands)
   2026
    2025
    2025
  

 Accrued expenses and other liabilities:
             

 Accrued tariffs and duties
  $10,381  $15,272  $9,878 

 Operating lease liability
   2,509   2,651   2,808 

 Salaries and wages
   2,958   5,336   3,774 

 Returns liability
   1,649   2,123   1,544 

 Income taxes payable
   2,085   -   871 

 Other
   7,177   9,431   6,056 

 Total accrued expenses and other liabilities
  $26,759  $34,813  $24,931 

 
  

 
 
  
 

 
 9. LONG-TERM DEBT

  

 On April 26, 2024, we refinanced our previous term debt and asset-based lending credit facilities by amending and restating our credit agreement with Bank of America, N.A., as agent, sole lead arranger and sole bookrunner and other lenders party thereto (the "ABL Agreement"). The ABL Agreement consists of a $175.0 million asset-based lending credit facility (the "ABL Facility") and a $50.0 million term loan facility (the "Term Facility"). The ABL Agreement is collateralized by a first-lien on substantially all of the Company's domestic assets. The ABL Facility includes a separate first in, last out (FILO) tranche, which allows the Company to borrow at higher advance rates on eligible accounts receivable and inventory balances. As of  June 30, 2026, we had borrowing capacity of $46.3 million under the ABL Facility. The Term Facility provides for monthly principal payments until the date of maturity, at which date the remaining principal balance is due.

  

  

 
 
 
 
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 Loans under the ABL Agreement bear interest at a variable rate equal to either (i) the Base Rate (as calculated in the ABL Agreement) or (ii) Term SOFR (as calculated in the ABL Agreement), plus in each case an interest margin determined by the Company's average daily availability as a percentage of the aggregate amount of revolving commitments for revolving loans and term loans, with a range of Base Rate margins and term SOFR margins, as set forth of the following chart: 

  

 
 Revolver Pricing Level
  
   Average Availability as a Percentage of Commitments
   Term SOFR Term Loan
    Base Rate Term Loan
    Term SOFR Revolver Loan
    Base Rate Revolver Loan
    Term SOFR FILO Loan
    Base Rate FILO Loan
  

 I
   > 66.7%
   2.75%  1.50%  1.25%  0.00%  1.75%  0.50%

 II
   >33.3% and < or equal to 66.7%
   3.00%  1.50%  1.50%  0.00%  2.00%  0.50%

 III
   < or equal to 33.3%
   3.25%  1.75%  1.75%  0.25%  2.25%  0.75%

 
  

 In connection with the ABL Agreement, we paid certain fees that were capitalized and will be amortized over the life of such agreement. 

  

 Current and long-term debt under the ABL Agreement consisted of the following: 

  

 
    June 30,
    December 31,
    June 30,
  

 ($ in thousands)
   2026
    2025
    2025
  

 Term Facility that matures in 2029 with an effective interest rate of 7.00% as of June 30, 2026, 7.50% as of December 31, 2025 and 7.69% as of June 30, 2025, respectively
  $22,581  $26,762  $30,942 

 ABL Facility that matures in 2029:
             

 SOFR borrowings with an effective interest rate of 5.51% as of June 30, 2026, 5.62% as of December 31, 2025 and 6.22% as of June 30, 2025, respectively
   100,500   94,300   103,300 

 Prime borrowings with an effective interest rate of 7.18% as of June 30, 2026, 7.16% as of December 31, 2025 and 7.94% as of June 30, 2025, respectively
   790   3,321   288 

 Total debt
   123,871   124,383   134,530 

 Less: Unamortized debt issuance costs
   (1,480)  (1,741)  (2,002)

 Total debt, net of debt issuance costs
   122,391   122,642   132,528 

 Less: Debt maturing within one year
   (8,361)  (8,361)  (8,361)

 Long-term debt
  $114,030  $114,281  $124,167 

 
  

 A schedule of debt payments for the next five years is as follows:

  

 
     Debt Payment
  

 ($ in thousands)
 Year
   Schedule
  

  2026
  $4,181 

  2027
   8,361 

  2028
   8,361 

  2029
   102,968 

  Total
  $123,871 

 
  

 Credit Facility Covenants

  

 Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. The ABL Facility and Term Facility also contain restrictions on the amount of dividend payments and share repurchases. As of June 30, 2026, we were in compliance with all credit facility covenants.

  

 
 
  
 

 
 10. TAXES

  

 The effective tax rate for the three months ended  June 30, 2026 and 2025 was 21.5% and 22.2%, respectively. The effective tax rate for the six months ended  June 30, 2026 and 2025 was 21.5% and 22.2%, respectively. The effective tax rate used for interim reporting purposes is based on management’s best estimate of factors impacting the effective tax rate, including projected income from our domestic and international businesses, for the full fiscal year and includes the impact of discrete items recognized in the quarter. There can be no assurance that the effective tax rate estimated for interim financial reporting purposes will approximate the effective tax rate determined at fiscal year-end.

  

 The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years 2019 through 2025 remain open to examination by most taxing authorities.

  

 Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. No material expenses were recognized during the three and six months ended June 30, 2026 and 2025. We do not believe there will be any material changes in our uncertain tax positions over the next 12 months.

  

 
 
 
 
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 11. EARNINGS PER SHARE

  

 Basic earnings per share ("EPS") is computed by dividing net income applicable to common shareholders by the weighted average number of common shares outstanding during each period. The diluted EPS computation includes common share equivalents, when dilutive.

  

 A reconciliation of the shares used in the basic and diluted income per common share computation is as follows:

  

 
    Three Months Ended
    Six Months Ended
  

   June 30,
    June 30,
  

 (shares in thousands)
   2026
    2025
    2026
    2025
  

                 

 Basic - weighted average shares outstanding
   7,509   7,461   7,522   7,460 

 Dilutive restricted share units
   52   26   50   24 

 Dilutive stock options
   37   6   35   9 

 Diluted - weighted average shares outstanding
   7,598   7,493   7,607   7,493 

 Anti-dilutive securities
   89   179   89   179 

 
  

 
 
  
 

 
 12. SUPPLEMENTAL CASH FLOW INFORMATION

  

 Supplemental cash flow information for the six months ended June 30, 2026 and 2025 is as follows:

  

 
   Six Months Ended 

  June 30, 

 ($ in thousands)
   2026
    2025
  

         

 Interest paid
  $3,363  $4,593 

         

 Federal, state, and local income taxes paid, net
  $1,091  $1,639 

         

 Property, plant, and equipment purchases in accounts payable
  $1,110  $800 

         

 Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations
  $4,706  $57 

 
   

 
 
  
 

 
 13. SEGMENT INFORMATION

  

 Reportable Segments - We have identified three reportable segments: Wholesale, Retail, and Contract Manufacturing.

  

 Wholesale. In our Wholesale segment, our products are offered in over 10,000 retail locations representing a wide range of distribution channels in the U.S., the U.K., and other international markets, mainly in Europe. These distribution channels vary by product line and target market and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers, and online retailers.

  

 Retail. In our Retail segment, we market directly to consumers through our Lehigh business-to-business platform, consumer e-commerce websites, third-party marketplaces, and our Rocky Outdoor Gear Store. Through our outdoor gear store, we generally sell first quality or discontinued products in addition to a limited amount of factory damaged goods, which typically carry lower gross margins.

  

 Contract Manufacturing. In our Contract Manufacturing segment, we include sales to the U.S. Military, private label sales, and any sales to customers in which we are contracted to manufacture or source a specific footwear product for a customer.

  

 Net sales to foreign countries represented approximately 2.3% and 3.6% of net sales for the three months ended  June 30, 2026 and 2025, respectively. Net sales to foreign countries represented approximately 2.1% and 2.8% of net sales for the six months ended June 30, 2026 and 2025, respectively. 

  

 Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer (CEO), who evaluates operating results and performance based on net sales and gross margin. Our CODM also uses results of net sales and gross margin to evaluate segment performance and allocate resources as the primary metrics for overall segment evaluation. Operating expenses such as warehousing, distribution, marketing, and other key activities supporting our operations are integrated to maximize efficiency and productivity; therefore, we do not include these expenses within our segment results but instead review them at the consolidated level.

  

 
 
 
 
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 The following is a summary of segment results for the Wholesale, Retail, and Contract Manufacturing segments for the 
 three and six months ended June 30, 2026 and 2025:
 

 
 
    Three Months Ended
    Six Months Ended
  

   June 30,
    June 30,
  

 ($ in thousands)
   2026
    2025
    2026
    2025
  

 NET SALES:
                 

 Wholesale
  $78,830  $73,092  $157,221  $147,877 

 Retail
   36,245   29,746   78,943   66,386 

 Contract Manufacturing
   3,293   2,809   6,605   5,457 

 Total Net Sales
  $118,368  $105,647  $242,769  $219,720 

                 

 COST OF GOODS SOLD:
                 

 Wholesale
  $38,195  $43,614  $89,626  $88,289 

 Retail
   16,384   16,291   40,912   36,186 

 Contract Manufacturing
   2,985   2,461   5,993   4,956 

 Total Cost of Goods Sold
  $57,564  $62,366  $136,531  $129,431 

                 

 GROSS MARGIN:
                 

 Wholesale
  $40,636  $29,478  $67,596  $59,588 

 Retail
   19,861   13,455   38,031   30,200 

 Contract Manufacturing
   307   348   611   501 

 Total Gross Margin
  $60,804  $43,281  $106,238  $90,289 

 
 

 
  

 

 Segment asset information is not prepared or used to assess segment performance.

 
 
  
 

 
 14. COMMITMENTS AND CONTINGENCIES

 
 
 
  
 

 
 
 
 
 Litigation
 

 

 

 

 
  

 
 
 
 The Company is involved in legal proceedings in the ordinary course of business. Unless otherwise stated, we believe that the likelihood of the resolution being materially adverse to our financial statements is remote and as such have
 not recorded any contingent liabilities within the accompanying Unaudited Condensed Consolidated Financial Statements.
 

 
  
 

 
 Gain Contingency
 

 
  
 

 
 In
 June 2022, we became aware of a misclassification of Harmonized Tariff Schedule (HTS) codes filed with t