What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-15 · 73 added, 76 removed, 245 unchanged (38% of the section changed)

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and our subsidiaries. 

We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky, Georgia Boot, Durango, Lehigh, The Original Muck Boot Company ("Muck"), XTRATUF, Servus, NEOS, 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:

We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky, Georgia Boot, Durango, Lehigh, The Original Muck Boot Company ("Muck"), XTRATUF, Servus, 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:

outdoor, work, duty, commercial military, military, and western.

Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $20.00 for our value priced products to $462.00 for our premium products.

Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $26.00 for our value priced products to $520.00 for our premium products.

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.

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The Acquisition was funded through cash on hand and borrowings under two new credit facilities .

Note 8 of the consolidated financial statements for information regarding the two new credit facilities.

The Acquisition expanded our brand portfolio to include Muck, XTRATUF, Servus, NEOS and Ranger brands (the "Acquired Brands").

See Note 9  of our Consolidated Financial Statements 

of the Consolidated Financial Statements for information regarding the two new credit facilities.

The Acquisition expanded our brand portfolio to include Muck, XTRATUF, Servus, Ranger, and NEOS brands (the "Acquired Brands").

We acquired 100% of the voting interests of certain subsidiaries and additional assets comprising the performance and lifestyle footwear business of Honeywell with the Acquisition.

See Note 3  of the consolidated financial statements for more information regarding the Acquisition.

We report our segment information in accordance with provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, 

Segment Reporting .

We evaluate business performance based upon several metrics, using segment profit as the primary financial measure. During the three months ended June 30, 2021, we changed our reporting segments when compared to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The change included renaming our Military reporting segment to "Contract Manufacturing" and changing the composition thereof to continue to include sales to the U.S.

military ("Military Contracts") and to include sales under manufacturing contracts for private labe l ("Private Contracts").

See Note 3  of the Consolidated Financial Statements for more information re garding the Acquisition.

On September 30, 2022, we completed the sale of the NEOS brand and related assets.

See Note 4  of our Consolidated Financial Statements  for additional information. 

We report our segment information in accordance with provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting.

We evaluate business performance based upon several metrics, using segment profit as the primary financial measure.

During the three months ended June 30, 2021, we changed our reporting segments when compared to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The change included renaming our Military reporting segment to "Contract Manufacturing" and changing the composition thereof to continue to include sales to the U.S.

military ("Military Contracts") and to include sales under manufacturing contracts for private label ("Private Contracts").

Previously, only Military Contracts were included in this segment.

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This segment reporting change reflects a corresponding change in how our Chief Executive Officer and our Chief Financial Officer, our chief operating decision makers ("CODMs"), review financial information in order to allocate resources and assess performance.

Previously, Private Contracts were included in the Wholesale segment, but with the Acquisition, our Wholesale segment has substantially increased in size and our CODMs determined that the change in segment reporting was appropriate at that time to mirror how they evaluate and manage the business.

The change in our reportable segments resulted in no change in our total consolidated financial condition, results of operations, or segment information previously reported, as we had no Private Contract sales during the quarterly period ended March 31, 2021 or fiscal year ended December 31, 2020.

Each of our reporting segments continue to employ consistent accounting policies.

As a result of this assessment, we now report our activities in the following three reporting 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.

Previously, Private Contracts were included in the Wholesale segment, but with the Acquisition, our Wholesale segment has substantially increased in size and our CODMs determined that the change in segment reporting was appropriate at that time to mirror how they evaluate and manage the business.

Each of our reporting segments continue to employ consistent accounting policies. 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.

and Canada as well as in several international markets.

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 outlet store.

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 Outdoor Gear Store.

Contract Manufacturing 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.

Note 17 –

Segment Information  for further information.

S ee  Note 18  of our Consolidated Financial Statements 

fo r further information.

Competitive Strengths

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Strong portfolio of brands.

We believe the Rocky, Georgia Boot, Durango, Lehigh, Muck, XTRATUF, Servus, NEOS, Ranger and Michelin brands are well recognized and established names that have a reputation for performance, quality and comfort in the markets they serve:

outdoor, work, western, duty, commercial military, and military.

We believe the Rocky, Georgia Boot, Durango, Lehigh, Muck, XTRATUF, Servus, Ranger and Michelin brands are well recognized and established names that have a reputation for performance, quality and comfort in the markets they serve:

outdoor, work, western, duty, commercial military and military.

We plan to continue strengthening these brands through product innovation in existing footwear markets, by extending certain of these brands into our other target markets and by introducing complementary apparel and accessories under our own brands.

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Diverse product sourcing and manufacturing capabilities.

We believe our strategy of utilizing both company operated and third-party facilities for the sourcing of our products, offers several advantages.

We believe our strategy of utilizing both company operated and third-party facilities for the sourcing of our products offers several advantages.

Operating our own facilities significantly improves our knowledge of the entire production process, which allows us to more efficiently source product from third parties that is of the highest quality and at the lowest cost available.

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We believe that our business-to-business CustomFit platform has ample opportunity to grow as we continue to pursue large manufacturers, distributors, and other companies who are reliant on safety footwear programs.

We feel that diversifying our product lines and continuing to provide an easy, no hassle approach to purchasing, will allow us to expand within the market.

We feel that diversifying our product lines and continuing to provide an easy, no hassle approach to purchasing will allow us to expand within the market.

Acquire or develop new brands.

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Our consumers demand high quality, durable products that incorporate the highest level of comfort and the most advanced technical features, and we are committed to ensuring our products reflect the most advanced designs, features and materials available in the marketplace.

Our outdoor product lines consist of all-season sport/hunting footwear, apparel and accessories that are typically waterproof and insulated and are designed to keep outdoor enthusiasts comfortable on rugged terrain or in extreme weather conditions.

Our duty product line consists of footwear products marketed to law enforcement, security personnel and postal employees who are required to spend a majority of time at work on their feet.

Our outdoor product lines consist of all-season sport/hunting and fishing footwear, apparel and accessories that are typically waterproof and insulated and are designed to keep outdoor enthusiasts comfortable on rugged terrain or in extreme weather conditions.

Our duty product line consists of footwear products marketed to law enforcement, security personnel and postal employees who are required to spend a majority of their time at work on their feet.

All of our duty footwear styles are designed to be comfortable, flexible, lightweight, slip resistant and durable.

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military product line consists of footwear products designed specifically for U.S.

military personnel.  These footwear products are designed and manufactured to meet the rigorous specification requirements, which include lightweight, durable, waterproof footwear products manufactured in the U.S.A.

military personnel.  These footwear products are designed and manufactured to meet rigorous specification requirements, which include lightweight, durable, waterproof footwear products manufactured in the U.S.A.

military products are marketed under the Rocky brand name.

Our products are marketed under nine well-recognized, proprietary brands, Rocky, Georgia Boot, Durango, Lehigh, Muck, XTRATUF, Ranger, Servus and NEOS, in addition to the licensed brand Michelin. 

Our products are marketed under nine well-recognized, proprietary brands, Rocky, Georgia Boot, Durango, Lehigh, Muck, XTRATUF, Ranger and Servus, in addition to the licensed brand Michelin. 

Rocky, established in 1979, is our premium priced line of branded footwear, apparel and accessories.

We currently design Rocky products for each of our six target markets and offer our products at a range of suggested U.S.

retail price points: $36.00 to $349.00 for our footwear pro ducts;

$14.00 to 

$145.00 for our apparel and accessory lines.

retail price points:

$38.00 to $405.00 for our footwear pro ducts;

and $17.00 to $160.00 for our apparel and accessory lines.

The Rocky brand originally targeted outdoor enthusiasts, particularly hunters, and has since become a market leader in the hunting boot category.

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Most of these products are waterproof, insulated and utilize our proprietary comfort systems.

We have also introduced men’s and women’s casual western footwear for consumers enamored with western influenced fashion.

In addition, we have introduced men’s and women’s casual western footwear for consumers enamored with western influenced fashion.

Georgia Boot was launched in 1937 and is our moderately priced, high quality line of work footwear.

Georgia Boot footwear is sold at suggested U.S.

retail price points ranging from $70.00 to $280.00.

This line of products primarily targets construction workers and those who work in industrial plants where special safety features are required for hazardous work environments.

retail price points ranging from $76.00 to $292.00.

This line of prod ucts primarily targets construction workers and those who work in industrial plants where special safety features are required for hazardous work environments.

Many of our boots incorporate safety toes or metatarsal guards to protect wearers’

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In addition, we market a line of Georgia Boot footwear to brand loyal consumers for farming, ranch work and other outdoor activities. These products are primarily all leather boots distributed through rural areas that allow us to incorporate other technical features to provide all day comfort for long days outside.

Durango Boots was established in 1966 and manufactures premium western footwear for men, women, and kids.

Durango Boots was established in 1966 and manufactures premium western footwear for men, women and kids.

Over the last 50 years, Durango has earned a reputation for building authentic western boots using exceptional materials and innovative constructions.

Our current line of Durango products is offered at suggested U.S. retail price points ranging from $74.00 to $462.00.

Our current line of Durango products is offered at suggested U.S. retail price point s ranging from $79.00 to $480.00.

Our brand portfolio categories include work-western, farm and ranch, western-performance, premium exotics, fashion-forward and casual wear.

Many of our western products are marketed to core western and aspirational western consumers who have an affinity and loyalty to the western lifestyle.

Such products include high-performance technologies that include our patented Dually Shank System which provides twice the torsion stability and midfoot support and various footbeds that offer flexibility, comfort, and support for immediate gratification.

The Lehigh brand was established in 1922 as a high quality line of occupational safety footwear that later expanded into a full service program offering.

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The Lehigh brand line of safety shoes has suggested U.S.

retail price points ranging from $80.00 to $221.00. 

retail pric e points ranging from $29.00 to $520.00. 

Michelin is a premier price point line of work footwear targeting specific industrial professions, primarily indoor professions.

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Suggested U.S.

retail prices for the Michelin brand are from $137.00 to $207.00.

The license agreement for the Michelin brand expires on December 31, 2025, with the option to renew.

retail prices for the Michelin brand are from $157.00 to $192.00.

The license agreement for the Michelin brand expires on December 31, 2025, with th e option to renew.

The Original Muck Boot Company

The Original Muck Boot Company was founded in 1999 and has pioneered the premium rubber and neoprene boot category by delivering high quality, innovative, weatherproof, and comfortable products.

The Original Muck Boot Company (Muck) was founded in 1999 and has pioneered the premium rubber and neoprene boot category by delivering high quality, innovative, weatherproof and comfortable products.

Our current line of Muck footwear products is offered at suggested U.S.

retail price points ranging from $65.00 to $245.00.

retail price points ranging from $55.00 to $270.00.

Through widespread consumer validation in the farm, agriculture, hunt and equestrian segments, Muck has been able to expand to new segments such as outdoor, gardening, industrial and general work, as well as to new regions such as the U.K., Norway and Germany to reach new consumers who have adopted the brand and its offerings. 

Both new and existing consumer groups have welcomed line extensions from the brand as the total catalog expands beyond its core offering into premium leather and other new footwear categories.

XTRATUF is a leading outfitter in the commercial, sport and recreational fishing segment, having provided fishermen with capable, comfortable, and reliable footwear for use in the harshest conditions for over 60 years.

XTRATUF is a leading outfitter in the commercial, sport and recreational fishing segment, having provided fishermen with capable, comfortable and reliable footwear for use in the harshest conditions for over 60 years.

With roots in Alaska and continued widespread use by those who live there, the XTRATUF brand has been able to expand to other regions throughout North America and most recently in the U.K. and Japan.

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Our current line of XTRATUF footwear products is offered at suggested U.S.

retail price points ranging from $40.00 to $215.00.

retail price points r anging from $45.00  to $245.00.

Servus boots date back to the 1920s and today the brand is known for its reliable PVC footwear made for wet and hazardous working conditions.

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Our current line of Servus footwear products is offered at suggested U.S.

retail price points ranging from $25.00 to $180.00.

NEOS is known for protective overshoes with excellent traction.

NEOS branded products are proven to keep feet dry, protected, and comfortable in extreme conditions and surefooted on almost any terrain.

NEOS products feature insulated and non-insulated offerings as well as products featuring proprietary traction technologies such as Glacier Trek SPK.

Our current line of NEOS overshoe products is offered at suggested U.S.

retail price points ranging from $95.00 to $195.00. 

NEOS products can be found on both professional and recreational users such as postal carriers, construction workers, arctic adventurers, film crews and those who live in or travel to cold, wet climates.

retail price points ra nging from $26.00 to $145.00.

Ranger serves two primary user segments:

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Our current line of Ranger footwear products is offered at suggested U.S.

retail price points ranging from $25.00 to $190.00.

retail price points ranging from $66.00 to $100.00.

Sales and Distribution

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See Note 1 8  of our Consolidated Financial Statements for more information regarding our three business segments.

In the U.S., we distribute Rocky, Georgia Boot, Durango, Muck, XTRATUF, Servus, NEOS, Ranger and Michelin products through a wide range of wholesale distribution channels.

As of December 31, 2021, our products were offered for sale at over 10,000 retail locations in the U.S.

Through our dedicated in-house sales team, we sell our products to wholesale accounts in the U.S.

who carry our branded products exclusively, as well as independent sales representatives who carry our branded products and other non-competing products.

In the U.S., we distribute Rocky, Georgia Boot, Durango, Muck, XTRATUF, Servus, Ranger and Michelin products through a wide range of wholesale distribution channels.

As of December 31, 2022, our products were offered for sale at over 10,000 retail locations in the U.S.

Through our dedicated in-house sales team we sell to wholesale accounts in the U.S.

through the use of a dedicated in-house sales team, exclusive, as well as independent sales representatives who carry our branded products and other non-competing products.

Our sales force is organized around major accounts, includi ng Boot Barn, Tractor Supply Company and Dick’s Sporting Goods, and around o ur target markets:

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Our Wholesale distribution channels vary by market:

Our outdoor products are sold primarily through sporting goods stores, outdoor specialty stores, online retailers, catalogs, and mass merchants.

Our outdoor products are sold primarily through sporting goods stores, outdoor specialty stores, online retailers, catalogs and mass merchants.

Our work-related products are sold primarily through work related retailers, farm and ranch stores, specialty safety stores, independent shoe stores, hardware stores and online retailers.

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Consumer e-commerce websites and third-party marketplaces;

our stores, which include our outlet store and retail stores.

Our stores, which include our outdoor gear store and our retail store.

We sell our product lines on our websites at rockyboots.com , georgiaboot.com , durangoboot.com, muckbootcompany.com, xtratuf.com, lehighoutfitters.com , lehighsafetyshoes.com , and slipgrips.com , as well as through online marketplaces.

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Our customers include large, national companies s uch as Carnival Cruise Lines, Pepsi, Schneider, Whirlpool, Holland America Cruise Lines, and Republic Services.

Outlet and Retail Stores

We operate the Rocky outlet store in Nelsonville, Ohio.

Our outlet store primarily sells first quality or discontinued products in addition to a limited amount of factory damaged goods.

Outdoor Gear and Retail Stores

We operate the Outdoor Gear Store in Nelsonville, Ohio.

Our outdoor gear store primarily sells first quality or discontinued products in addition to a limited amount of factory damaged goods.

Related products from other manufacturers are also sold in the store.

Our outlet store allows us to showcase the breadth of our product lines as well as to cost-effectively sell slow-moving inventory.

Our outlet store also provides an opportunity to interact with consumers to better understand their needs.

Our outdoor gear store allows us to showcase the breadth of our product lines as well as to cost-effectively sell slow-moving inventory.

Our outdoor gear store also provides an opportunity to interact with consumers to better understand their needs.

Lehigh’s successful continued focus on converting our customers from delivery via our mobile and retail stores to purchasing via our Custom Fit sites and delivery direct has led to the continued reduction of the mobile and retail stores in the past several years.

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military, we also bid on private label contracts. Our sales under such contracts are dependent on us winning the bids for these contracts.

We are currently fulfilling several multiyear contracts for the U.S.

In 2022, we fulfilled several multiyear contracts for the U.S.

We will continue to actively bid on U.S.

military contracts.

Marketing and Advertising

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Manufacturing and Sourcing

We manufacture footwear in facilities that we operate in the Dominican Republic, Puerto Rico, Chuzhou, China and Rock Island, Illinois, and source footwear, apparel and accessories from third-party facilities, in China, Vietnam, Indonesia, Dominican Republic and Mexico.

Our facilities in Chuzhou and Rock Island were acquired through the Acquisition that closed on March 15, 2021. We do not have long-term contracts with any of our third-party manufacturers.

We manufacture footwear in facilities that we operate in the Dominican Republic, Puerto Rico, Chuzhou, China and Rock Island, Illinois, and source footwear, apparel and accessories from third-party facilities in China, Vietnam, Dominican Republic and Mexico.

Our facilities in Chuzhou and Rock Island were acquired through the Acquisition. We do not have long-term contracts with any of our third-party manufacturers.

We believe that operating our own facilities significantly improves our knowledge of the entire raw material sourcing and manufacturing process, which enables us to more efficiently source finished goods from third parties that are of the highest quality and at the lowest cost available, as well as reduce our lead times.

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manufacturer.

Sourcing products from offshore third-party facilities generally enables us to lower our costs per unit while maintaining high product quality and it limits the capital investment required to establish and maintain company operated manufacturing facilities.

Sourcing products from offshore third-party facilities generally enables us to lower our costs per unit while maintaining high product quality and limits the capital investment required to establish and maintain company operated manufacturing facilities.

Because quality is an important part of our value proposition to our retailers and consumers, we source products from manufacturers who have demonstrated the intent and ability to mainta in the high quality that has become associated with our brands.

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and other international markets, mainly in Europe.

We ship our products from our finished goods distribution facilities located in Logan, Ohio, Lancaster, Ohio and Reno, Nevada.

We ship our products from our finished goods distribution facilities located in Ohio and Nevada.

As a result of the Acquisition, we also utilize a third-party distribution center in Canada. 

Certain of our retailers receive shipments directly from our manufacturing sources, including all of our U.S.

military sales, which are shipped directly from our manufacturing facility in Puerto Rico.

Net sales to foreign countries represented approximately 6.9% of net sales in 2021 and 0.8% of net sales in 2020.

military sales, which are shipped directly from our manufacturing facility in Puerto R ico.

Net sales to foreign countries represented approximately 6.2% of net sales in 2022 and  6.9% of ne t sales in 2021. 

As previously mentioned, we maintain manufacturing facilities that we operate in the Dominican Republic and Chuzhou, China.

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The net book value of fixed assets located outside of the U.S.

totaled $13.0 million at December 31, 2021, of which approximately $4.6 million resides in the Dominican Republic and approximately $8.4 million resides in China. The net book value of fixed assets located outside of the U.S.

totaled $4.5 million at December 31, 2020, all of which resides in the Dominican Republic.

totaled $12.6 million at December 31, 2022, of which approximatel y $4.6 million resides in the Dominican Republic and approximatel y $8.0 mil lion resides in China. 

Resources and Suppliers 

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and foreign registrations for the trademarks used in our business, including our major brands Rocky, Georgia Boot, Durango, and Lehigh.

We also acquired various patents and trademark registrations through the Acquisition, including the brands Muck, XTRATUF, Servus, and Ranger, and NEOS. In addition, we license the use of third party trademarks, including Gore-Tex and Michelin, in order to market our products.

We also acquired various patents and trademark registrations through the Acquisition, including the brands Muck, XTRATUF, Servus and Ranger. In addition, we license the use of third party trademarks, including Gore-Tex and Michelin, in order to market our products.

Our license with W.

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Human Capital

At December 31, 2021 , we had approximately 

2,825 employees of which approximately 

2,800 are full time employees.

At December 31, 2022 , we had approximately 2,500  

employees of which approximately 2,490  are full time employees.

Approximately 1,900 

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Available Information

We make available free of charge on our corporate website, www.rockybrands.com , our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission.

As required by the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we file annual, quarterly and current reports proxy statements and other information with the Securities and Exchange Commission ("SEC").

The SEC maintains a website that contains information about issuers, like us, who file electronic reports with the SEC.

The address of the SEC’s website is www.sec.gov .

In addition, we make available free of charge on our corporate website, www.rockybrands.com , our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. 

Except as specifically incorporated by reference into this Annual Report on Form 10-K, information on those websites is not part of this report.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business