Selling, general and administrative (SG&A) expenses were $22.8 million, or 38.8% of sales, for the second quarter of 2007 compared to $21.5 million, or 37.4% of sales, a year ago. The increase in SG&A expenses is partially due to additional selling expenses related to increased sales and higher professional fees.
Income from operations was $1.1 million, or 1.9% of net sales, for the period compared to $2.6 million, or 4.6% of net sales, in the prior year.
Funded Debt and Interest Expense: The Company's funded debt at June 30, 2007 was $102.7 million versus $109.7 million at June 30, 2006. Interest expense increased to $3.3 million for the second quarter of 2007 versus $3.0 million for the same period last year. The increase in interest expense was due to the write off of prepaid financing costs related to the refinancing of the company's term loans.
Inventory: Inventory decreased $10.3 million, or 11.0%, to $84.0 million at June 30, 2007 compared with $94.3 million on the same date a year ago. The decrease in inventory is due to our focus on improved inventory management through the scheduling of receipts to more closely coincide with projected shipments and the reduction of discontinued products.
Distribution Consolidation: In an ongoing effort to further reduce costs and improve operating efficiencies, the Company is consolidating its distribution and warehousing. Beginning in 2008, Rocky Brands will distribute products in the U.S. solely from its 196,000 square foot facility in Logan, Ohio, and no longer utilize its leased facility in Tunkhannock, Pennsylvania. At the same time, Rocky Brands has signed a letter of intent with Kane Distribution, which currently manages the Pennsylvania facility, to serve as a third-party logistics partner to manage and operate its combined distribution center in Ohio.
Outlook: The Company stated it remains comfortable with its previously issued guidance and continues to expect fiscal 2007 revenues to increase approximately 5% over 2006 levels, and diluted earnings per share to increase approximately 35% over 2006 levels.
marketing@alchempro.com
