Rocky Brands Posts Q2 Loss, Muck Brand Impaired

TL;DR

**RCKY is bleeding cash with a Q2 loss and a major brand impairment; stay away until they show a turnaround.**

AI Summary

ROCKY BRANDS, INC. reported a net loss for the three months ended June 30, 2024, which resulted in zero dilutive share units and stock options being included for the period due to their antidilutive effect. The company's common stock and additional paid-in capital remained stable at $25,000,000 from December 31, 2023, through June 30, 2025. Retained earnings showed fluctuations, starting at $7,461,167 on December 31, 2023, decreasing to $7,454,465 by March 31, 2024, and further to $7,444,881 by June 30, 2024. The impairment of the Muck brand for the year ended December 31, 2024, indicates a significant challenge in its brand portfolio. Trademarks were valued at $149,328 on December 31, 2024, and $156,043 on June 30, 2025, showing a slight increase. Patents were $16,671 on December 31, 2024, and $18,006 on June 30, 2025. Customer relationships were valued at $166,701 on December 31, 2024, and $174,973 on June 30, 2025. The company's financial position reflects ongoing challenges, particularly with brand performance and profitability.

Why It Matters

ROCKY BRANDS' net loss and the impairment of its Muck brand signal significant operational headwinds, directly impacting investor confidence and potentially leading to a decline in stock value. For employees, this could mean job insecurity or a freeze in hiring as the company seeks to cut costs and improve profitability. Customers might see changes in product offerings or marketing strategies for the Muck brand as the company attempts to revitalize it. In the broader market, this highlights the intense competition in the footwear industry, where even established brands like Muck can face significant challenges, potentially affecting other players in the sector.

Risk Assessment

Risk Level: high — The risk level is high due to the reported net loss for the three months ended June 30, 2024, and the explicit mention of the impairment of the Muck brand for the year ended December 31, 2024. This indicates significant financial underperformance and asset devaluation, directly impacting profitability and shareholder equity.

Analyst Insight

Investors should consider holding off on new investments in RCKY until the company demonstrates a clear path to profitability and a strategy for revitalizing underperforming brands like Muck. Current investors should closely monitor upcoming earnings reports for signs of improved financial health and strategic adjustments.

Key Numbers

• $25,000,000 — Common Stock & APIC (Stable from Dec 2023 to Jun 2025, indicating no new equity raises or buybacks.)
• $7,444,881 — Retained Earnings (Decreased from $7,461,167 on Dec 31, 2023, reflecting a net loss.)
• $149,328 — Trademarks (Dec 2024) (Value of trademarks, including the impaired Muck brand.)
• $156,043 — Trademarks (Jun 2025) (Slight increase in trademark value despite Muck brand impairment.)
• $16,671 — Patents (Dec 2024) (Value of patents held by the company.)
• $18,006 — Patents (Jun 2025) (Slight increase in patent value.)
• $166,701 — Customer Relationships (Dec 2024) (Value of customer relationships, an intangible asset.)
• $174,973 — Customer Relationships (Jun 2025) (Increase in customer relationship value.)

Key Players & Entities

• ROCKY BRANDS, INC. (company) — filer of the 10-Q
• Muck brand (company) — brand that experienced impairment
• $25,000,000 (dollar_amount) — common stock and additional paid-in capital
• $7,461,167 (dollar_amount) — retained earnings on December 31, 2023
• $7,444,881 (dollar_amount) — retained earnings on June 30, 2024
• $149,328 (dollar_amount) — trademarks value on December 31, 2024
• $156,043 (dollar_amount) — trademarks value on June 30, 2025
• $16,671 (dollar_amount) — patents value on December 31, 2024
• $18,006 (dollar_amount) — patents value on June 30, 2025
• $166,701 (dollar_amount) — customer relationships value on December 31, 2024

FAQ

Risk Factors

• Brand Impairment and Net Losses [high — financial]: The company experienced a net loss for the three months ended June 30, 2024. Furthermore, the impairment of the Muck brand for the year ended December 31, 2024, indicates significant challenges within the company's brand portfolio and potential future write-downs.
• Antidilutive Securities [medium — financial]: Due to the net loss in the three months ended June 30, 2024, zero dilutive share units and stock options were included in the period's calculations because their inclusion would have had an antidilutive effect on earnings per share.

Industry Context

Rocky Brands operates in the footwear industry, a sector characterized by brand loyalty, seasonal demand, and increasing competition from both established players and direct-to-consumer brands. Trends include a growing demand for performance and outdoor-oriented footwear, as well as a focus on sustainability.

Regulatory Implications

As a publicly traded company, Rocky Brands is subject to SEC regulations and reporting requirements. Compliance with accounting standards (GAAP) is crucial, especially concerning asset valuation and impairment testing, which can significantly impact reported financial performance.

What Investors Should Do

1. Monitor brand performance and recovery strategies.
2. Analyze the drivers of net losses.
3. Evaluate intangible asset management.

Key Dates

• 2024-06-30: End of Q2 2024 — Reported a net loss for the quarter, leading to antidilutive effects for share units and options.
• 2024-12-31: End of Fiscal Year 2024 — Impairment of the Muck brand occurred during this period, impacting intangible asset values.
• 2025-06-30: End of Q2 2025 — Intangible assets like trademarks, patents, and customer relationships showed slight increases, despite prior brand impairment.

Glossary

Antidilutive

A security or factor that would increase earnings per share (EPS) if exercised or converted. In cases of net loss, these are excluded from EPS calculations to avoid artificially inflating the loss per share. (Explains why no dilutive share units or stock options were included in the Q2 2024 EPS calculation due to the company's net loss.)

Additional Paid-in Capital

The amount of capital received by a company from its shareholders in exchange for stock that exceeds the par value of the stock. (This account, along with common stock, remained stable at $25,000,000, indicating no significant equity transactions.)

Retained Earnings

The cumulative amount of net income that a company has retained over time, after paying dividends. (The decrease in retained earnings from $7,461,167 to $7,444,881 reflects the net losses incurred by the company.)

Impairment

A reduction in the carrying value of an asset when its fair value is less than its book value. This often occurs when an asset's future economic benefits are no longer expected to be realized. (The impairment of the Muck brand signifies a loss in value and potential future profitability of that specific brand.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year's filing is not available in the provided text. However, the data indicates a negative trend in retained earnings, suggesting a decline in profitability compared to prior periods, exacerbated by brand impairment.

Filing Documents

• rcky20250630_10q.htm (10-Q) — 1002KB
• ex_823274.htm (EX-31.1) — 13KB
• ex_823275.htm (EX-31.2) — 13KB
• ex_823276.htm (EX-32) — 6KB
• logo.jpg (GRAPHIC) — 9KB
• 0001437749-25-025432.txt ( ) — 4544KB
• rcky-20250630.xsd (EX-101.SCH) — 37KB
• rcky-20250630_cal.xml (EX-101.CAL) — 41KB
• rcky-20250630_def.xml (EX-101.DEF) — 240KB
• rcky-20250630_lab.xml (EX-101.LAB) — 207KB
• rcky-20250630_pre.xml (EX-101.PRE) — 268KB
• rcky20250630_10q_htm.xml (XML) — 710KB

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited), December 31, 2024, and June 30, 2024 (Unaudited) 2 Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statements of Shareholders ' Equity for the Three and Six Months Ended June 30, 2025 and 2024 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (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

Quantitative and Qualitative Disclosures About Market Risk 21 Item 4.

Controls and Procedures

Controls and Procedures 21 PART II Other Information Item 1A.

Risk Factors

Risk Factors 21 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21 Item 5. Other Information 21 Item 6. Exhibits 22

SIGNATURES

SIGNATURES 23 1 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

– FINANCIAL STATEMENTS

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, 2025 2024 2024 ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 2,779 $ 3,719 $ 4,107 Trade receivables – net 66,367 71,983 62,968 Other receivables 142 1,028 427 Inventories – net 186,836 166,701 174,973 Income tax receivable - - 1,025 Prepaid expenses 5,345 3,008 5,659 Total current assets 261,469 246,439 249,159 LEASED ASSETS 4,724 6,030 7,367 PROPERTY, PLANT & EQUIPMENT – net 50,908 49,666 51,296 GOODWILL 47,844 47,844 47,844 IDENTIFIED INTANGIBLES – net 104,428 105,823 111,220 OTHER ASSETS 1,647 1,498 988 TOTAL ASSETS $ 471,020 $ 457,300 $ 467,874 LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 61,483 $ 58,069 $ 57,824 Current portion of long-term debt 8,361 8,361 8,361 Accrued expenses and other liabilities 24,931 23,977 20,663 Total current liabilities 94,775 90,407 86,848 LONG-TERM DEBT 124,167 120,376 144,073 LONG-TERM LEASE 2,156 3,537 4,914 DEFERRED INCOME TAXES 10,044 10,044 7,475 DEFERRED LIABILITIES 813 712 752 TOTAL LIABILITIES 231,955 225,076 244,062 SHAREHOLDERS' EQUITY: Common stock, no par value; - - - 25,000,000 shares authorized; issued and outstanding June 30, 2025 - 7,461,167 ; December 31, 2024 - 7,454,465 ; June 30, 2024 - 7,444,881 Additional paid-in-capital 74,470 73,866 73,223 Retained earnings 164,595 158,358 150,589 Total shareholders' equity 239,065 232,224 223,812 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 471,020 $ 457,300 $ 467,874 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

View Full Filing

View this 10-Q filing on SEC EDGAR