What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-10 · 177 added, 204 removed, 114 unchanged (77% of the section changed)

All references to "we," "us," "our," "Rocky Brands," or the "Company" in this Annual Report on Form 10-K mean Rocky Brands, Inc.

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, 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:

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, The Original Muck Boot Company ("Muck"), Georgia Boot, Durango, XTRATUF, 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:

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 $26.00 for our value priced products to $520.00 for our premium products.

Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $45.00 for our value priced products to $655.00 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.

On January 24, 2021, we entered into a Purchase Agreement (the "Purchase Agreement") with certain subsidiaries of Honeywell International Inc.

(collectively, "Honeywell"), to purchase Honeywell's performance and lifestyle footwear business, including brand names, trademarks, assets and liabilities associated with Honeywell's performance and lifestyle footwear business (the "Acquisition").

On March 15, 2021 (the "Acquisition Date"), pursuant to the terms and conditions set forth in the Purchase Agreement, we completed the Acquisition for an aggregate preliminary closing price of approximately $207 million, net of cash acquired, based on preliminary working capital and other adjustments. Upon a final agreement of net working capital as of the Acquisition Date, we owed Honeywell an additional $5.4 million.

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

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 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.

The Private Contract sales have characteristics more like Military Contracts, with similar sales, delivery processes and gross margins.

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.

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 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.

S ee  Note 18  of our Consolidated Financial Statements 

fo r further 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 and each of our reporting segments continue to employ consistent accounting policies.

S ee Note 1 9 of our Consolidated Financial Statements fo r further information.

The Company's portfolio of brands is organized into the following reportable segments, in which our products are distributed:

Contract Manufacturing

We distribute Rocky, Muck, Georgia Boot, Durango, XTRATUF, Lehigh, Ranger and Michelin products through a wide range of wholesale distribution channels throughout the world.

O ur 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.

December 31, 2023

, our products were offered for sale at over

retail locations in the U.S.

and Canada as well as several international markets, such as Europe.

We sell to wholesale accounts in the U.S.

through the use of a dedicated in-house sales team, and 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, including Boot Barn, Tractor Supply Company and Amazon, and around our target markets:

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

Our sales force is also organized around brands, regions and customers in order to target a broad range of distribution channels.

All of our sales people actively call on their retail customer base to educate them on the quality, comfort, technical features and breadth of our product lines and to ensure that our products are displayed effectively at retail locations.

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 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;

Our duty products are sold primarily through uniform stores, catalog specialists and online retailers;

Our commercial military products are sold primarily through base exchanges, such as the Army Air Force Exchange Store (AAFES), and consumer e-commerce websites;

Our western products are sold through western stores, work stores, specialty farm and ranch stores, online retailers, and fashion-oriented footwear retailers.

We market products directly to consumers through three retail strategies:

Lehigh business-to-business including direct sales and through our CustomFit websites;

Consumer e-commerce websites (B2C) and third-party marketplaces;

Brick and Mortar Stores, which include our outdoor gear and retail store.

We sell our Lehigh brand of safety shoes along with in-house and third-party branded work product to our business customers directly through our CustomFit websites, that are tailored to the specific needs of our customers.

Our customers' employees order directly through their employers' established CustomFit website, and the footwear is delivered directly to the customer via a common freight carrier.

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.

We believe that our internet presence allows us to showcase the breadth and depth of our product lines in each of our target markets and enables us to educate our consumers about the unique technical features of our products.

Outdoor Gear and Retail Store

We operate the Rocky Outdoor Gear Store in Nelsonville, Ohio.

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

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

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.

Additionally, Lehigh has one retail store located at the Puget Sound Naval Base where we sell select product directly to customers.

Contract Manufacturing

While we are focused on continuing to build our Wholesale and Retail business, we also actively bid, from time to time, on eligible footwear contracts with the U.S.

In addition to contracts with the U.S.

Military, we bid on private label contracts.

Our sales under such contracts are dependent on us winning the bids for these contracts.

In 2023, we fulfilled two multi-year contracts for the U.S.

We expect to continue to actively bid on U.S.

Military contracts.

Brands and Product Lines

Our products are marketed under eight well-recognized, proprietary brands:

Rocky, Muck, Georgia Boot, Durango, XTRATUF, Lehigh and Ranger, 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:

for our footwear products;

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.

In 2002, we also extended into hunting apparel, including jackets, pants, gloves and caps.

Our Rocky products for hunters and other outdoor enthusiasts are designed for specific weather conditions and the diverse terrains of North America.

These products incorporate a range of technical features and designs such waterproof breathable fabric, 3M Thinsulate insulation, nylon Cordura fabric and camouflaged uppers featuring either Venator, Mossy Oak or Realtree patterns.

We use rugged outsoles made by industry leaders like Vibram, as well as our own proprietary design features, to make the products durable and easy to wear.

We also produce Rocky duty and commercial military, public service footwear targeting law enforcement professionals, military, security workers, fire industry professionals and postal service employees, and we have established leading market share positions in these categories.

In 2002, we introduced Rocky work footwear designed for varying weather conditions or difficult terrain, particularly for people who make their living outdoors such as those in lumber, forestry, and oil & gas occupations.

These products typically include many of the proprietary features and technologies that we incorporate in our hunting and outdoor products.

We have also introduced western influenced work boots for farmers and ranchers.

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

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

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 international 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.

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

Georgia Boot footwear is sold at suggested U.S.

retail price points ranging from

This line of products primarily targets blue collar workers across various trades, including construction, logging, warehousing, landscaping and farming.

Many of our boots incorporate safety toes and non-slip outsoles to prevent injuries in the workplace.

We also offer other more specialized protective features, such as puncture resistance, as well as metatarsal guards that protect wearers’ feet from heavy objects.

Each boot is designed to meet the demands of specific trades while also integrating cutting-edge technology and materials to create the most comfortable and durable footwear that is tough enough to handle the rigors found on job sites across America.

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

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.

Since the early 1950s, XTRATUF has been 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.

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.

Fueled by the strong growth in the outdoor segment;

particularly white boat lifestyle and sport fishing, the brand has been adopted by non-fishermen seeking quality, functional footwear.

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

retail price points ranging from

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.

While still manufacturing and selling branded core product, the brand primarily focuses on providing managed programs to corporations that require and provide a subsidy to their employees to wear safety footwear.

Most of the footwear incorporates a protective toe and can include a metatarsal guard, puncture-resistant, slip-resistant outsole and special materials to combat caustic substances.

Lehigh offers an extensive selection of styles to fit any work environment.

Lehigh’s unique business model provides companies with customizations to fit their needs and digital tools for greater visibility and control of their program.

As the established leader in the industry, Lehigh introduced and utilizes 3DFit technology and wellness foot products as a way to elevate safety and improve productivity.

By providing an accurate fit, body aligning orthotics and anti-fatigue compression, Lehigh helps companies go beyond accident protection to full body wellness protection.

Lehigh provides and improves safety and health to a wide range of customer accounts in the industrial, distribution, hospitality and healthcare industries.

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

retail price points ranging from $91.00

Ranger primarily serves the outdoor recreational market and offers a range of pac-boots that are built for wet and cold weather that provide exceptional comfort and function at a value price.

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

retail price points ranging from

$74.00 to $100.00

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

The license to design, develop and manufacture footwear under the Michelin name was secured in 2006.

Suggested U.S.

retail prices for the Michelin brand are from

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

Product Lines

Our brands are organized into six distinct product lines, which consist of high-quality products that target the following markets:

Our outdoor product line consists of footwear, apparel and accessory items marketed to outdoor enthusiasts who spend time actively engaged in activities such as hunting, fishing, camping and hiking.

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 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 work product line consists of footwear and apparel marketed to industrial and construction workers, as well as workers in the hospitality industry, such as restaurants or hotels and those who partake in farm and ranch work.

All of our work products are specially designed to be comfortable, incorporate safety features for specific work environments or tasks and meet applicable federal and other standards for safety.

This category includes products such as safety toe footwear for industrial and construction workers and non-slip footwear for hospitality workers.

Our western product line currently consists of authentic footwear products marketed to farmers and ranchers who generally live in rural communities in North America.

In addition, we have western styles that are marketed for fashion and casual wear.

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.

Duty footwear is generally designed to fit as part of a uniform and typically incorporates stylistic features, such as black leather uppers in addition to the comfort features that are incorporated in all of our footwear products.

Commercial Military.

Our commercial military product line consists of footwear products marketed to military personnel as a substitute for the government issued military boots.

Our commercial military boots are designed to be comfortable, lightweight, and durable and are marketed under the Rocky brand name.

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

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.

Military products are marketed under the Rocky brand name.

Competitive Strengths

1 unchanged sentence

Strong portfolio of brands.

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 believe the Rocky, Muck, Georgia Boot, Durango, XTRATUF, Lehigh, 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.

8 unchanged sentences

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.

8 unchanged sentences

Expand business internationally .

We intend to extend certain of our brands into international markets. 

We believe this is a significant opportunity because of the long history and authentic heritage of these brands.

We intend on growing our business internationally through a network of distributors.

We intend to grow our business internationally through a network of distributors.

Grow our e-commerce business .

We intend to drive business to our branded e-commerce w ebsites as well as third-party marketplace platforms.

We believe there is an opportunity to capitalize on the changes in the market to online shopping as we focus advertising efforts and maximize our distribution capabilities. 

Increases in our Lehigh business.

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.

We intend to continue to acquire or develop new brands that are complementary to our portfolio and could leverage our operational infrastructure and distribu tion network.

In March 2021, we were able to execute this strategy through the Acquisition.

Product Lines  

Our product lines consist of high-quality products that target the following markets:

Our work product lines consist of footwear and apparel marketed to industrial and construction workers, as well as workers in the hospitality industry, such as restaurants or hotels and those who partake in farm and ranch work.

All of our work products are specially designed to be comfortable, incorporate safety features for specific work environments or tasks and meet applicable federal and other standards for safety.

This category includes products such as safety toe footwear for industrial and construction workers and non-slip footwear for hospitality workers.

Our western product line currently consists of authentic footwear products marketed to farmers and ranchers who generally live in rural communities in North America.

Commercial Military.

Our commercial military product line consists of footwear products marketed to military personnel as a substitute for the government issued military boots.

Our commercial military boots are designed to be comfortable, lightweight, and durable and are marketed under the Rocky brand name.

Our outdoor product lines consist of footwear, apparel and accessory items marketed to outdoor enthusiasts who spend time actively engaged in activities such as hunting, fishing, camping and hiking.

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.

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

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 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:

$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.

In 2002, we also extended into hunting apparel, including jackets, pants, gloves and caps.

Our Rocky products for hunters and other outdoor enthusiasts are designed for specific weather conditions and the diverse terrains of North America.

These products incorporate a range of technical features and designs such as Gore-Tex waterproof breathable fabric, 3M Thinsulate insulation, nylon Cordura fabric and camouflaged uppers featuring either Venator, Mossy Oak or Realtree patterns.

We use rugged outsoles made by industry leaders like Vibram as well as our own proprietary design features to make the products durable and easy to wear.

We also produce Rocky duty and commercial military footwear targeting law enforcement professionals, military, security workers, fire industry professionals and postal service employees, and we have established leading market share positions in these categories.

These products typically include many of the proprietary features and technologies that we incorporate in our hunting and outdoor products.

We have also introduced western influenced work boots for farmers and ranchers.

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

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 $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’

feet from heavy objects and non-slip outsoles to prevent slip related injuries in the workplace.

All of our boots are designed to help prevent injury and subsequent work loss and are designed according to standards determined by the Occupational Safety & Health Administration or other standards required by employers.

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.

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 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.

Most of the footwear incorporates a protective toe and can include a metatarsal guard, puncture-resistant plate, slip-resistant outsole and special materials to combat caustic substances.

Lehigh offers an extensive selection of styles to fit any work environment and has a wide range of customer accounts in the industrial, hospitality and healthcare industries.

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

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.

The license to design, develop and manufacture footwear under the Michelin name was secured in 2006.

Suggested U.S.

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 (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 $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.

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.

Fueled by the strong growth in the outdoor segment, the brand has been adopted by non-fishermen seeking quality, functional footwear.

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

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.

Primarily sold to industrial and work users throughout North America, the Servus brand is a staple in our portfolio of brands.

With a substantial percentage of the line manufactured in our own facility in Rock Island, Illinois and other North American locations, the brand is positioned to offer great value to end consumers. 

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

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

Ranger serves two primary user segments:

outdoor recreation and industrial/work. 

Ranger products consist of a focused range of pac-boots, rubber boots, waders, hip-boots and over-boots that are built for wet and cold weather and provide exceptional comfort and function at a value price.

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

retail price points ranging from $66.00 to $100.00.

Sales and Distribution

Our products are distributed through three distinct business segments:

Wholesale, Retail and Contract Manufacturing.

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, 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:

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

Our sales force is organized around brands, regions and customers in order to target a broad range of distribution chan nels. All of our sales people actively call on their retail customer base to educate them on the quality, comfort, technical features and breadth of our product lines and to ensure that our products are displayed effectively at retail locations.

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 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.

Our duty products are sold primarily through uniform stores, catalog specialists and online retailers.

Our commercial military products are sold primarily through base exchanges such as AAFES and consumer e-commerce websites.

Our western products are sold through western stores, work stores, specialty farm and ranch stores, online retailers and more recently, fashion-oriented footwear retailers.

We market products directly to consumers through three retail strategies: 

Lehigh business-to-business including direct sales and through our Custom Fit websites;

Consumer e-commerce websites and third-party marketplaces;

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.

We also sell to our business customers directly through our Custom Fit websites that are tailored to the specific needs of our customers.

Our customers’

employees order directly through their employers’

established Custom Fit website, and the footwear is delivered directly to the consumer via a common freight carrier.

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

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 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.

As of December 31, 2022, our only remaining retail store is located at The Puget Sound Naval Base.

Contract Manufacturing

While we are focus ed on continuing to build our Wholesale and Retail business, we also actively bid, from time to time, on eligible footwear contracts with the U.S.

In addition to contracts with the U.S.

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

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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A key component to supporting our retail partners includes in-store point of purchase materials that add a dramatic focus to our brands and the products our retail partners carry.

We also advertise through targeted national and local cable programs, radio advertisements and print publications aimed at audiences that share the demographic profile of our typical customers.

We also advertise through targeted national and local cable programs, radio advertisements and print publications aimed at audiences that share the demographic profile of our typical customers.

In addition, we promote through event sponsorships which provide significant national exposure for all of our brands as well as a direct connection to our target consumer.

Our print advertisements and television commercials emphasize the technical features of our products as well as their high quality, comfort, functionality and durability. 

We also support independent dealers by listing their locations in our national print advertisements.

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Our product design and development process is highly collaborative and is typically initiated both internally by our development staff and externally by our retailers and suppliers, whose employees are generally active users of our products and understand the needs of our consumers.

Our product design and development personnel, marketing personnel and sales representatives work closely together to identify opportunities for new styles, patterns, design improvements and newer, more advanced materials.

Our product design and development personnel, marketing personnel and sales representatives work closely together to identify opportunities for new styles, patterns, design improvements and newer, more advanced materials.

We have a dedicated group of product design and development professionals, some of whom are well recognized experts in the footwear and apparel industries, who continually interact with consumers to better understand their needs and are committed to ensuring our products reflect the most advanced designs, features and materials available in the marketplace.

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

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.

In addition, our Puerto Rico and Rock Island facilities allow us to produce footwear for the U.S.

In addition, our Puerto Rico facility allows us to produce footwear for the U.S.

Military and other commercial businesses that require production by a U.S.

manufacturer.

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.

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.

Quality control is stressed at every stage of the manufacturing process and is monitored by trained quality assurance personnel at each of our manufacturing facilities, including our third-party factories.

In addition, we utilize a team of procurement, quality control and logistics employees in our China office to visit factories to conduct quality control reviews of raw materials, work in process inventory and finished goods.

In addition, we utilize a team of procurement, quality control and logistics employees in our China office and a third-party quality control service provider to visit factories to conduct quality control reviews of raw materials, work in process inventory and finished goods.

We also utilize quality control personnel at our finished goods distribution facilities to conduct quality control testing on incoming sourced finished goods and raw materials and inspect random samples from our finished goods inventory from each of our manufacturing facilities to ensure that all items meet our high-quality standards.

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and other international markets, mainly in Europe.

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. 

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

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 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.

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

Net sales to foreign countries represented approximately 5.1% of net sales in 2023 and 6.2% of ne t sales in 2022.

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

In addition, we utilize an office in China to support our contract manufacturers.

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

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 

totaled $11.9 million at December 31, 2023, of which approximatel y $3.9 million resides i n the Dominican Republic and approximatel y $8.0 mil lion resides in China.

Resources and Suppliers

We purchase raw materials from sources worldwide.

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We own numerous U.S.

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. In addition, we license the use of third party trademarks, including Gore-Tex and Michelin, in order to market our products.

and foreign registrations for the patents and trademarks used in our business, including our major brands Rocky, Muck, Georgia Boot, Durango, XTRATUF, Lehigh, 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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("Gore") permits us to use the Gore-Tex and related marks on products and styles that have been approved in advance by Gore.

The license agreement has a one-year term that automatically renews each year, unless either party elects to terminate by giving advance written notice to the other party by October 1 for termination effective December 31 of that same year.

The license agreement has a one-year term that automatically renews each year, unless either party elects to terminate by giving advance written notice to the other party by October 1 for termination effective December 31 of that same year.

Similarly, our license with Michelin Lifestyle Limited permits us to use the Michelin brand and related marks on our products.

Our license agreement with Michelin Lifestyle Limited to use the Michelin name expires on December 31, 2025, with the option to renew.

Our license agreement with Michelin Lifestyle Limited to use the Michelin name expires on December 31, 2025, with the option to renew.

and China, our design patents are generally in effect for 15 years from the date of issuance.

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Product function, design, comfort, quality, technological and material improvements, brand awareness, timeliness of product delivery and pricing are all important elements of competition in the markets for our products.

We believe that the strength of our brands, the quality of our products and our long-term relationships with a broad range of retailers allows us to compete effectively in the footwear and apparel markets that we serve.

We believe that the strength of our brands, the quality of our products and our long-term relationships with a broad range of retailers allow us to compete effectively in the footwear and apparel markets that we serve.

However, we compete with footwear and apparel companies that have greater financial, marketing, distribution and manufacturing resources than we do.

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Human Capital

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

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

Approximately 1,900 

of our employees work in our manufacturing facilities in the Dominican Republic, Puerto Rico, Rock Island, Illinois and Chuzhou, China.

At December 31, 2023 , we had approximately 2,100 employees of which approximately 2,060 are full time employees.

Approximately 1,600 of our employees work in our manufacturing facilities in the Dominican Republic, Puerto Rico and Chuzhou, China.

We believe our relations with our employees are in good standing.

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Our Health and Wellness Committee strives to educate our employees on the importance of taking care of yourself both inside and outside the workplace.

Throughout the year we contract with various health and wellness professionals outside of our organization to hold educational sessions for our employees both in-person and virtually.  In response to the COVID-19 pandemic, we have ensured flexibility in the workplace by allowing our employees to work from home and we have increased our cleaning protocols.

Nothing is more fundamental than providing employees with an environment where they feel safe, secure and supported.

Throughout the year we contract with various health and wellness professionals outside of our organization to hold educational sessions for our employees both in-person and virtually.

Nothing is more fundamental than providing our employees with an environment where they feel safe, secure and supported.

Talent Recruitment, Retention and Development

Our employee culture is built on our core values of integrity, responsibility and humility.

The ability to attract, retain and develop talented employees is crucial to our long-term success.

Our employee culture is built on our core values of integrity, responsibility and humility.

The ability to attract, retain and develop talented employees is crucial to our long-term success.

We focus on attracting, developing and retaining highly talented individuals through practices that promote inclusion, diversity and equality.

We recruit through a variety of outreach methods including our rockybrands.com/careers website and other online platforms, such as LinkedIn, college recruitment efforts, network relationships and direct communication with career centers.

When new employment opportunities within our Company arise, we send out internal communications to inform all associates of new openings.

We review internal applications for consideration before considering external applicants.

We recruit through a variety of outreach methods including our rockybrands.com/careers website and other online platforms, such as LinkedIn, college recruitment efforts, network relationships and direct communication with career centers.

When new employment opportunities within our Company arise, we send out internal communications to inform all associates of new openings.

We review internal applications for consideration before considering external applicants.

We strive to maximize engagement with our employees in a variety of ways, including scheduled meetings between employees and executive leadership within the first few months of employment, face-to-face and virtual interviews with employees following 60 days and one year of employment, annual performance evaluations, regular check-in surveys and exit surveys.

We also rely on our management team to influence growth and develop a path for success with employees on each team within our organization.

Quarterly, our CEO and CFO hold all-employee communication meetings to keep our employees apprised of recent happenings within our organization and to allow employees a forum for their voice to be heard. 

We are committed to having a diverse and inclusive workforce which is reflected in a wide range of cultures, religions, ethnicities and nationalities as well as varied professional and educational backgrounds. We believe that the inclusion of diverse perspectives results in better outcomes and policies.

We aim to foster an inclusive workplace through recruitment and development efforts, and through the retention of diverse talent with a goal of expanding representation across all dimensions of equality and inclusion.

We strive to provide an environment that allows our employees to bring their authentic selves to work every day, and we are committed to fostering a workplace that is free of discrimination, harassment, and which promotes allyship, advocacy and an overall sense of belonging.

We also rely on our management team to influence growth and develop a path for success with employees on each team within our organization.

Quarterly, our CEO a nd COO hold all-employee communication meetings to keep our employees apprised of recent happenings within our organization and to allow employees a forum for their voice to be heard.

We believe that the inclusion of diverse perspectives results in better outcomes and policies.

We aim to foster an inclusive workplace through recruitment and development efforts, and through the retention of diverse talent with a goal of expanding representation across all dimensions of equality and inclusion.

We strive to provide an environment that allows our employees to bring their authentic selves to work every day, and we are committed to fostering a workplace that is free of discrimination, harassment, and which promotes allyship, advocacy and an overall sense of belonging.

Compensation and Benefits

Our compensation structure is set up to reward employees for performance.

We regularly evaluate employee compensation to ensure it is competitive and in-line with market benchmarks and to reward employees who perform at a high level.

We offer comprehensive benefit programs to our employees including medical, dental and vision.

Our compensation structure is set up to reward employees for performance.

We regularly evaluate employee compensation to ensure it is competitive and in-line with market benchmarks and to reward employees who perform at a high level.

We offer comprehensive benefit programs to our employees including medical, dental and vision.

We also provide a 401(k) match and safe harbor contribution, paid time off, including maternal and paternal leave, life insurance and long-term and short-term disability.

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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. 

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