What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 89 added, 110 removed, 367 unchanged (35% of the section changed)

4 unchanged sentences

(In thousands, except share amounts)

September 30,

CURRENT ASSETS:

4 unchanged sentences

Other receivables

142 1,028 427

Inventories – net

193,613 166,701 171,847

Income tax receivable

Prepaid expenses

33 unchanged sentences

25,000,000 shares authorized;

issued and outstanding June 30, 2025 - 7,461,167 ;

issued and outstanding September 30, 2025 - 7,488,341 ;

December 31, 2024 - 7,454,465 ;

June 30, 2024 - 7,444,881

September 30, 2024 - 7,449,020

Additional paid-in-capital

12 unchanged sentences

Three Months Ended

Six Months Ended

$ 105,647 $ 98,258 $ 219,720 $ 211,164

Nine Months Ended

September 30,

COST OF GOODS SOLD

62,366 60,220 129,431 128,977

43,281 38,038 90,289 82,187

OPERATING EXPENSES

36,125 33,530 74,427 69,695

INCOME FROM OPERATIONS

7,156 4,508 15,862 12,492

INTEREST EXPENSE AND OTHER – net

( 2,519 ) ( 6,131 ) ( 4,874 ) ( 10,785 )

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

4,637 ( 1,623 ) 10,988 1,707

INCOME TAX EXPENSE (BENEFIT)

1,029 ( 380 ) 2,438 399

NET INCOME (LOSS)

$ 3,608 $ ( 1,243 ) $ 8,550 $ 1,308

INCOME (LOSS) PER SHARE

$ 0.48 $ ( 0.17 ) $ 1.15 $ 0.18

$ 0.48 $ ( 0.17 ) $ 1.14 $ 0.18

INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

INCOME PER SHARE

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

7,461 7,429 7,460 7,423

7,493 7,429 7,493 7,466

See Notes to Unaudited Condensed Consolidated Financial Statements

8 unchanged sentences

7,412 $ 71,973 $ 151,582 $ 223,555

SIX MONTHS ENDED JUNE 30, 2024

NINE MONTHS ENDED SEPTEMBER 30, 2024

$ 2,550 $ 2,550

9 unchanged sentences

Stock issued for options exercised, including tax benefits

- $ 599 - 599

Stock compensation expense

1 unchanged sentence

7,423 $ 73,223 $ 150,589 $ 223,812

$ 5,279 $ 5,279

Dividends paid on common stock ($ 0.155 per share)

( 1,155 ) ( 1,155 )

Stock compensation expense

26 $ 314 - 314

BALANCE - September 30, 2024

7,449 $ 73,537 $ 154,713 $ 228,250

BALANCE - December 31, 2024

7,454 $ 73,866 $ 158,358 $ 232,224

SIX MONTHS ENDED JUNE 30, 2025

NINE MONTHS ENDED SEPTEMBER 30, 2025

$ 4,941 $ 4,941

10 unchanged sentences

( 1,156 ) ( 1,156 )

Repurchase of common stock

Stock issued for options exercised, including tax benefits

Stock compensation expense

9 $ 400 - 400

BALANCE - June 30, 2025

7,461 $ 74,470 $ 164,595 $ 239,065

$ 7,212 $ 7,212

Dividends paid on common stock ($ 0.155 per share)

( 1,159 ) ( 1,159 )

Stock issued for options exercised, including tax benefits

20 $ 561 - 561

Stock compensation expense

BALANCE - September 30, 2025

7,488 $ 75,449 $ 170,648 $ 246,097

See Notes to Unaudited Condensed Consolidated Financial Statements

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

$ 8,550 $ 1,308

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization

Noncash lease expense

Provision for bad debts

Stock compensation expense

Loss on term loan extinguishment

Provision for bad debts

Amortization of debt issuance costs and loan fees

Loss on term loan extinguishment

Change in assets and liabilities:

Contract receivables

( 20,134 ) ( 5,772 )

Other current assets

( 2,338 ) ( 2,298 )

( 70 ) ( 23 )

Accounts payable

Operating lease liability

( 1,402 ) ( 1,270 )

Accrued and other liabilities

Contract liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets

( 3,872 ) ( 2,130 )

Proceeds from sale of business

Net cash used in investing activities

( 3,872 ) ( 430 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facility

23,710 120,892

Repayments on revolving credit facility

( 16,000 ) ( 110,833 )

Proceeds on term loan

Repayments on term loan

( 4,181 ) ( 80,115 )

Payments of debt issuance costs and loan fees

( 145 ) ( 2,051 )

Proceeds from stock options

1 unchanged sentence

Dividends paid on common stock

( 2,312 ) ( 2,300 )

Net cash provided by (used in) financing activities

890 ( 23,808 )

DECREASE IN CASH AND CASH EQUIVALENTS

( 940 ) ( 363 )

CASH AND CASH EQUIVALENTS:

1 unchanged sentence

END OF PERIOD

$ 2,779 $ 4,107

See Notes to Unaudited Condensed Consolidated Financial Statements

10 unchanged sentences

All such adjustments reflected in the Unaudited Condensed Consolidated Financial Statements are considered to be of normal and recurring nature.

The results of operations for the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of the results to be expected for the whole year.

The results of operations for the three and nine months ended September 30, 2025 and 2024 are not necessarily indicative of the results to be expected for the whole year.

The December 31, 2024 Unaudited Condensed Consolidated Balance Sheet data was derived from the audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America ("GAAP").

9 unchanged sentences

ASU 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures This pronouncement requires expanded income tax disclosures primarily related to an entity's effective tax rate reconciliation and income taxes paid.

Q4 2025 The Company is still assessing the impact of the new accounting standard but does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Improvements to Income Tax Disclosures

This pronouncement requires expanded income tax disclosures primarily related to an entity's effective tax rate reconciliation and income taxes paid.

The Company is still assessing the impact of the new accounting standard but does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

3 unchanged sentences

The Company is still assessing the impact of the new accounting standard on its consolidated financial statements.

ASU 2025 - 06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ):

Targeted Improvements to the Accounting for Internal-Use Software

This pronouncement modernizes the accounting for internal-use software costs by removing all references to prescriptive and sequential software development stages.

The new standard requires entities to consider whether significant development uncertainty has been resolved before starting to capitalize software costs and enhances disclosure requirements.

Q4 2028 (fiscal year) Q1 2029 (interim period)

The Company is still assessing the impact of the new accounting standard on its consolidated financial statements.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA").

The OBBBA includes modifications to the international tax framework and amends and extends several provisions of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation, the deductibility of domestic research and development expenses, and the business interest expense limitation.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company has evaluated the impact of the OBBBA and does not believe it will have a material impact on the Company's consolidated financial statements and related disclosures.

The fair value accounting standard defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

45 unchanged sentences

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

As of June 30, 2025 , December 31, 2024, and June 30, 2024, there were no contract receivable or contract liability balances outstanding.

As of September 30, 2025 , December 31, 2024, and September 30, 2024, there were no contract receivable or contract liability balances outstanding.

Taxes assessed by a governmental authority that are both imposed on, and concurrent with, a specific revenue producing transaction that are collected from customers are excluded from revenue.

11 unchanged sentences

Our credit policy generally provides that trade receivables will be deemed uncollectible and written-off once we have pursued all reasonable efforts to collect on the account.

Trade receivables are presented net of the related allowance for credit losses of approximately $ 0.8 million, $ 1.0 million and $ 0.9 million at June 30, 2025 , December 31, 2024 and June 30, 2024 , respectively.

Trade receivables are presented net of the related allowance for credit losses of approximat ely $ 0.8 mil lion, $ 1.0 million and $ 1.1 million at September 30, 2025 , December 31, 2024 and September 30, 2024 , respectively.

Inventories are comprised of the following:

September 30,

($ in thousands)

5 unchanged sentences

$ 193,613 $ 166,701 $ 171,847

The asset associated with our returns reserve included within inventories wa s approximately $ 0.9 million, $ 0.9 million and $ 0.7 million at June 30, 2025 , December 31, 2024 and June 30, 2024 , respectively.

The asset associated with our returns reserve included within inventories wa s approximatel y $ 0.9 mill ion, as of September 30, 2025 , December 31, 2024 and September 30, 2024 .

GOODWILL & IDENTIFIED INTANGIBLE ASSETS

There was no change in goodwill during the six months ended June 30, 2025 .

There was no change in goodwill during the nine months ended September 30, 2025 .

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

June 30, 2025

September 30, 2025

($ in thousands)

21 unchanged sentences

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

June 30, 2024

September 30, 2024

($ in thousands)

7 unchanged sentences

$ 121,208 $ ( 10,687 ) - $ 110,521

The weighted average life of patents and customer relation ships is 2.7 years and 10.8 years, res pectively.

Amortization expense for intangible assets subject to amortization for each of the three months ended June 30, 2025 and 2024 was $ 0.7 million.

Amortization expense for intangible assets subject to amortization for the six months ended June 30, 2025 and 2024 was $ 1.4 million.

As of June 30, 2025 , a schedule of approximate expected remaining amortization expense related to intangible assets for the years ending December 31 is as follows:

The weighted average remaining life of patents and customer relationships is 2.6 years and 10.5 years, res pectively.

Amortization expense for intangible assets subject to amortization for each of the three months ended September 30, 2025 and 2024 was $ 0.7 million.

Amortization expense for intangible assets subject to amortization for the nine months ended September 30, 2025 and 2024 was $ 2.1 million.

As of September 30, 2025 , a schedule of approximate expected remaining amortization expense related to intangible assets for the years ending December 31 is as follows:

($ in thousands)

3 unchanged sentences

The ABL Agreement is collateralized by a first -lien on substantially all of the Company's domestic assets.

The ABL Facility includes a separate first in, last out (FILO) tranche, which allows the Company to borrow at higher advance rates on eligible accounts receivables and inventory balances.

As of June 30, 2025 , we had borrowing capacity of $ 45.7 mi llion under the ABL Facility.

The ABL Facility includes a separate first in, last out (FILO) tranche, which allows the Company to borrow at higher advance rates on eligible accounts receivable and inventory balances.

As of September 30, 2025 , we had borrowing capacity of $ 40.1 mil lion under the ABL Facility.

The Term Facility provides for monthly principal payments until the date of maturity, at which date the remaining principal balance is due.

The April 26, 2024 refinance of debt resulted in a $ 2.6 million expense within Interest Expense and Other - net in the accompanying Unaudited Combined Condensed Statements of Operations, consisting of a $ 1.1 million loss on term loan extinguishment and a $ 1.5 million term loan prepayment penalty for the six months ended June 30, 2024.

The $ 1.1 million loss on term loan extinguishment is included as a noncash adjustment to net income and the $ 1.5 million prepayment penalty is included within Repayments of long-term debt in the accompanying Unaudited Combined Condensed Statements of Cash Flows for the six months ending June 30, 2024.

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

7 unchanged sentences

Base Rate FILO Loan

2.75 % 1.50 % 1.25 % 0.00 % 1.75 % 0.50 %

>33.3% and < or equal to 66.7%

3.00 % 1.50 % 1.50 % 0.00 % 2.00 % 0.50 %

< or equal to 33.3%

3.25 % 1.75 % 1.75 % 0.25 % 2.25 % 0.75 %

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

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

September 30,

($ in thousands)

Term Facility that matures in 2029 with an effective interest rate of 7.69 % as of June 30, 2025, 10.47 % as of December 31, 2024 and 8.93 % as of June 30, 2024, respectively

$ 30,942 $ 35,123 $ 49,303

Term Facility that matures in 2029 with an effective interest rate of 7.67% as of September 30, 2025, 10.47% as of December 31, 2024 and 8.82% as of September 30, 2024, respectively

ABL Facility that matures in 2029:

SOFR borrowings with an effective interest rate of 6.22 % as of June 30, 2025, 6.24 % as of December 31, 2024 and 7.18 % as of June 30, 2024, respectively

103,300 91,300 100,278

Prime borrowings with an effective interest rate of 7.94 % as of June 30, 2025, 7.77 % as of December 31, 2024 and 8.75 % as of June 30, 2024, respectively

288 4,577 5,377

134,530 131,000 154,958

SOFR borrowings with an effective interest rate of 6.06% as of September 30, 2025, 6.24% as of December 31, 2024 and 6.76% as of September 30, 2024, respectively

Prime borrowings with an effective interest rate of 7.71% as of September 30, 2025, 7.77% as of December 31, 2024 and 8.47% as of September 30, 2024, respectively

Unamortized debt issuance costs

( 2,002 ) ( 2,263 ) ( 2,524 )

Total debt, net of debt issuance costs

132,528 128,737 152,434

Debt maturing within one year

( 8,361 ) ( 8,361 ) ( 8,361 )

Long-term debt

$ 124,167 $ 120,376 $ 144,073

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

2 unchanged sentences

Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement.

As of June 30, 2025 , we were in compliance with all credit facility covenants.

As of September 30, 2025 , we were in compliance with all credit facility covenants.

The ABL Facility and Term Facility also contain restrictions on the amount of dividend payments and share repurchases.

As of June 30, 2025 , the Company was in compliance with the amounts paid on dividends and share repurchases in accordance with our credit facilities.

As of September 30, 2025 , the Company was in compliance with the amounts paid on dividends and share repurchases in accordance with our credit facilities.

We were in compliance with all applicable credit facility covenants under our previous term debt and asset-based lending credit facility through April 26, 2024, the date on which we refinanced such debt.

The effective tax rate for the six months ended June 30, 2025 and 2024 was 22.2 % and 23.4 %, r espectively.

The effective tax rate for the three months ended September 30, 2025 and 2024 was 22.0 % and 23.4 %, respectively.

The effective tax rate for the nine months ended September 30, 2025 and 2024 w as 22.1 % an d 23.4 %, r espectively.

The effective tax rate used for interim reporting purposes is based on management’s best estimate of factors impacting the effective tax rate, including projected income from our domestic and international businesses, for the full fiscal year and includes the impact of discrete items recognized in the quarter.

4 unchanged sentences

Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense.

No such expenses were recognized during the three and six months ended June 30, 2025 and 2024 .

No such expenses were recognized during the three and nine months ended September 30, 2025 and 2024 .

We do not believe there will be any material changes in our uncertain tax positions over the next 12 months.

2 unchanged sentences

The diluted EPS computation includes common share equivalents, when dilutive.

A reconciliation of the shares used in the basic and diluted income per common share computation for the three and six months ended June 30, 2025 and 2024 is as follows:

A reconciliation of the shares used in the basic and diluted income per common share computation for the three and nine months ended September 30, 2025 and 2024 is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(shares in thousands)

Basic - weighted average shares outstanding

7,461 7,429 7,460 7,423

Dilutive restricted share units

1 unchanged sentence

Diluted - weighted average shares outstanding

7,493 7,429 7,493 7,466

Anti-dilutive securities

179 54 179 103

( 1 ) Due to a net loss for the three months ended June 30, 2024, zero dilutive restricted share units and stock options are included for the period because the effect would be anti-dilutive.

SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information for the six months ended June 30, 2025 and 2024 is as follows:

Six Months Ended

Supplemental cash flow information for the nine months ended September 30, 2025 and 2024 is as follows:

Nine Months Ended

September 30,

($ in thousands)

Interest paid

$ 4,593 $ 5,436

Federal, state, and local income taxes paid, net

$ 1,639 $ 219

Property, plant, and equipment purchases in accounts payable

6 unchanged sentences

These distribution channels vary by product line and target market and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers and online retailers.

In our Retail segment, we market directly to consumers through our Lehigh business-to-business including direct sales and through our CustomFit websites, consumer e-commerce websites, third -party marketplaces, and our Rocky Outdoor Gear Store.

In our Retail segment, we market directly to consumers through our Lehigh business-to-business platform, consumer e-commerce websites, third -party marketplaces, and our Rocky Outdoor Gear Store.

Through our outdoor gear store, we generally sell first quality or discontinued products in addition to a limited amount of factory damaged goods, which typically carry lower gross margins.

2 unchanged sentences

Military, private label sales and any sales to customers in which we are contracted to manufacture or source a specific footwear product for a customer.

Net sales to foreign countries represented approximately 3.6 % and 2.7 % of net sales for the three months ended June 30, 2025 and 2024, respectively.

Net sales to foreign countries represented approximately 2.8 % and 2.4 % of net sales for the six months ended June 30, 2025 and 2024, respectively.

Net sales to foreign countries represented approximately 2.9 % and 4.8 % of net sales for the three months ended September 30, 2025 and 2024, respectively.

Net sales to foreign countries represented approximately 2.8 % and 3.2 % of net sales for the nine months ended September 30, 2025 and 2024, respectively.

Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer (CEO), who evaluates operating results and performance based on net sales and gross margin.

3 unchanged sentences

The following is a summary of segment results for the Wholesale, Retail and Contract Manufacturing segments for the

three and six months ended June 30, 2025 and 2024 .

three and nine months ended September 30, 2025 and 2024 :

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

$ 73,092 $ 68,258 $ 147,877 $ 148,050

29,746 26,110 66,386 56,517

Contract Manufacturing

2,809 3,890 5,457 6,597

Total Net Sales

$ 105,647 $ 98,258 $ 219,720 $ 211,164

COST OF GOODS SOLD:

$ 43,614 $ 42,826 $ 88,289 $ 93,587

16,291 13,876 36,186 29,481

Contract Manufacturing

2,461 3,518 4,956 5,909

Total Cost of Goods Sold

$ 62,366 $ 60,220 $ 129,431 $ 128,977

GROSS MARGIN:

$ 29,478 $ 25,432 $ 59,588 $ 54,463

13,455 12,234 30,200 27,036

Contract Manufacturing

348 372 501 688

Total Gross Margin

$ 43,281 $ 38,038 $ 90,289 $ 82,187

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

10 unchanged sentences

We have the potential to recover the total amount of overpaid duties resulting in an estimated potential refund of approximately $ 7.9 million, of which we have received $ 5.1 million to date.

No refunds were received for the six months ended June 30, 2025 and June 30, 2024.

No refunds were received for the nine months ended September 30, 2025 and September 30, 2024.

We are accounting for these post summary corrections as a gain contingency, and as such have not recorded these potential refunds within the accompanying Unaudited Condensed Consolidated Balance Sheet due to uncertainty of collection.

1 unchanged sentence

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-Q

Item 1. Financial Statements