ROCKY BRANDS, INC. 10-Q

ITEM 1 – FINANCIAL STATEMENTS Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share amounts) (Unaudited) June 30, December 31, June 30, 2026 2025 2025 ASSETS: CURRENT ASSETS: Cash and cash equivalents $ 2,627 $ 2,902 $ 2,779 Trade receivables – net 76,887 77,055 66,367 Other receivables 20,084 4,952 142 Inventories – net 173,525 181,134 186,836 Income tax receivable - 1,050 - Prepaid expenses 5,506 3,623 5,345 Total current assets 278,629 270,716 261,469 LEASED ASSETS 7,497 4,175 4,724 PROPERTY, PLANT & EQUIPMENT – net 52,360 49,929 50,908 GOODWILL 47,844 47,844 47,844 IDENTIFIED INTANGIBLES – net 101,639 103,033 104,428 OTHER ASSETS 1,939 1,791 1,647 TOTAL ASSETS $ 489,908 $ 477,488 $ 471,020 LIABILITIES AND SHAREHOLDERS' EQUITY: CURRENT LIABILITIES: Accounts payable $ 58,747 $ 52,958 $ 61,483 Current portion of long-term debt 8,361 8,361 8,361 Accrued expenses and other liabilities 26,759 34,813 24,931 Total current liabilities 93,867 96,132 94,775 LONG-TERM DEBT 114,030 114,281 124,167 LONG-TERM LEASES 5,110 1,727 2,156 DEFERRED INCOME TAXES 12,381 12,381 10,044 DEFERRED LIABILITIES 888 879 813 TOTAL LIABILITIES 226,276 225,400 231,955 SHAREHOLDERS' EQUITY: Common stock, no par value; - - - 25,000,000 shares authorized; issued and outstanding June 30, 2026 - 7,487,899 ; December 31, 2025 - 7,505,139 ; June 30, 2025 - 7,461,167 Additional paid-in-capital 74,935 76,090 74,470 Retained earnings 188,697 175,998 164,595 Total shareholders' equity 263,632 252,088 239,065 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 489,908 $ 477,488 $ 471,020 See Notes to Unaudited Condensed Consolidated Financial Statements 2 Table of Contents Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 NET SALES $ 118,368 $ 105,647 $ 242,769 $ 219,720 COST OF GOODS SOLD 57,564 62,366 136,531 129,431 GROSS MARGIN 60,804 43,281 106,238 90,289 OPERATING EXPENSES 41,119 36,125 82,919 74,427 INCOME FROM OPERATIONS 19,685 7,156 23,319 15,862 INTEREST EXPENSE AND OTHER – net ( 1,995 ) ( 2,519 ) ( 4,029 ) ( 4,874 ) INCOME BEFORE INCOME TAX EXPENSE 17,690 4,637 19,290 10,988 INCOME TAX EXPENSE 3,809 1,029 4,151 2,438 NET INCOME $ 13,881 $ 3,608 $ 15,139 $ 8,550 INCOME PER SHARE Basic $ 1.85 $ 0.48 $ 2.01 $ 1.15 Diluted $ 1.83 $ 0.48 $ 1.99 $ 1.14 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 7,509 7,461 7,522 7,460 Diluted 7,598 7,493 7,607 7,493 See Notes to Unaudited Condensed Consolidated Financial Statements 3 Table of Contents Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Shareholders ’ Equity (In thousands, except per share amounts) (Unaudited) Common Stock and Additional Paid-in Capital Total Shares Retained Shareholders' Outstanding Amount Earnings Equity BALANCE - December 31, 2024 7,454 $ 73,866 $ 158,358 $ 232,224 SIX MONTHS ENDED JUNE 30, 2025 Net income $ 4,941 $ 4,941 Dividends paid on common stock ($ 0.155 per share) ( 1,156 ) ( 1,156 ) Repurchase of common stock ( 10 ) $ ( 201 ) - ( 201 ) Stock issued for options exercised, including tax benefits 1 19 - 19 Stock-based compensation 7 386 - 386 BALANCE - March 31, 2025 7,452 $ 74,070 $ 162,143 $ 236,213 Net loss $ 3,608 $ 3,608 Dividends paid on common stock ($ 0.155 per share) ( 1,156 ) ( 1,156 ) Stock compensation expense 9 400 - 400 BALANCE - June 30, 2025 7,461 $ 74,470 $ 164,595 $ 239,065 BALANCE - December 31, 2025 7,505 $ 76,090 $ 175,998 $ 252,088 SIX MONTHS ENDED JUNE 30, 2026 Net income $ 1,259 $ 1,259 Dividends paid on common stock ($ 0.155 per share) ( 1,169 ) ( 1,169 ) Restricted stock awards issued, net of tax withholding obligations 25 ( 89 ) - ( 89 ) Stock-based compensation 6 455 - 455 BALANCE - March 31, 2026 7,536 $ 76,456 $ 176,088 $ 252,544 Net income $ 13,881 $ 13,881 Dividends paid on common stock ($ 0.17 per share) ( 1,272 ) ( 1,272 ) Repurchase of common stock ( 54 ) $ ( 1,990 ) - ( 1,990 ) Stock issued for options exercised, including tax benefits 1 14 - 14 Stock compensation expense 5 455 - 455 BALANCE - June 30, 2026 7,488 $ 74,935 $ 188,697 $ 263,632 See Notes to Unaudited Condensed Consolidated Financial Statements 4 Table of Contents Rocky Brands, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 15,139 $ 8,550 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,900 4,825 Noncash lease expense 1,385 1,363 Stock compensation expense 910 786 Provision for bad debts 1,539 434 Amortization of debt issuance costs and loan fees 363 327 Change in assets and liabilities: Receivables ( 16,502 ) 6,068 Inventories 2,644 ( 20,134 ) Other current assets ( 1,883 ) ( 2,338 ) Other assets ( 109 ) ( 70 ) Accounts payable 4,680 2,614 Operating lease liability ( 1,466 ) ( 1,402 ) Accrued and other liabilities ( 5,024 ) 710 Income taxes 3,135 309 Net cash provided by operating activities 9,711 2,042 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets ( 4,826 ) ( 3,872 ) Net cash used in investing activities ( 4,826 ) ( 3,872 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from revolving credit facility 22,919 23,710 Repayments on revolving credit facility ( 19,250 ) ( 16,000 ) Repayments on term loan ( 4,181 ) ( 4,181 ) Payments of debt issuance costs and loan fees ( 142 ) ( 145 ) Proceeds from stock options 16 19 Taxes paid related to net shares settlement of equity awards ( 91 ) - Repurchase of common stock ( 1,990 ) ( 201 ) Dividends paid on common stock ( 2,441 ) ( 2,312 ) Net cash (used in) provided by financing activities ( 5,160 ) 890 DECREASE IN CASH AND CASH EQUIVALENTS ( 275 ) ( 940 ) CASH AND CASH EQUIVALENTS: BEGINNING OF PERIOD 2,902 3,719 END OF PERIOD $ 2,627 $ 2,779 See Notes to Unaudited Condensed Consolidated Financial Statements 5 Table of Contents Rocky Brands, Inc. and Subsidiaries Notes to Unaudited Condensed Consolidated Financial Statements (in thousands, except per share amounts) 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including The Original Muck Boot Company ("Muck"), XTRATUF, Rocky, Durango, Georgia Boot, 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: work, outdoor, western, commercial military, duty, and military. 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. The accompanying Unaudited Condensed Consolidated Financial Statements reflect all adjustments that are necessary for a fair presentation of the financial results. 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, 2026 and 2025 are not necessarily indicative of the results to be expected for the whole year. The December 31, 2025 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"). This Quarterly Report on Form 10 -Q should be read in connection with our Annual Report on Form 10 -K for the year ended December 31, 2025 , which includes all disclosures required by GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications We have reclassified certain amounts in prior periods in Note 8 - Accrued Expenses and Other Liabilities to conform to current period presentation. 2. ACCOUNTING STANDARDS UPDATES Recently Issued Accounting Pronouncements Rocky Brands, Inc. is currently evaluating the impact of certain ASUs on its Unaudited Condensed Consolidated Financial Statements: Standard Description Anticipated Adoption Periods Effect on Consolidated Financial Statements ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses This pronouncement requires disclosure of disaggregated information about certain income statement expense line items within the notes to the consolidated financial statements. Q4 2027 (fiscal year) Q1 2028 (interim period) The Company is still assessing the impact of the new accounting standard on its consolidated financial statements. ASU 2025 - 11, Interim Reporting (Topic 270 ) Narrow-Scope Improvements This pronouncement improves the navigability of the required interim disclosure and provides clarification around the principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. Q4 2027 (fiscal year) Q1 2028 (interim period) 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. Accounting Standards Adopted in the Prior Year Standard Description Effect on Consolidated Financial Statements 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. The Company has included all required disclosures within its Form 10 -K for the year ended December 31, 2025. See Note 10 - Taxes for further information on income taxes. 6 Table of Contents 3. FAIR VALUE The fair value accounting standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This standard clarifies how to measure fair value as permitted under other accounting pronouncements. 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. This standard also establishes a three -level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs. The fair values of cash and cash equivalents, receivables, and payables approximate their carrying values because of the short-term nature of these instruments. Receivables consist primarily of amounts due from our customers, net of allowances, expected insurance recoveries, and expected IEEPA tariff refunds. The carrying amounts of our long-term credit facilities and other short-term financing obligations also approximate fair value, as they are comparable to financing in the third -party marketplaces due to their variable interest rate terms. Our long-term credit facilities and short-term financing obligations are classified as Level 2. We hold assets and liabilities in a separate trust in connection with deferred compensation plans. The deferred compensation assets are classified as trading securities within other assets and the deferred compensation liabilities are classified within deferred liabilities in the accompanying Consolidated Balance Sheet. The fair value of these assets is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency and are therefore classified as Level 1. Some assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. These assets primarily include property, plant, and equipment, operating lease assets, definite-lived intangibles, and goodwill and other indefinite-lived intangible assets that are reduced to fair value when impaired. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. There was no impairment charge for such assets recorded during the six months ended June 30, 2026 and 2025 . 4. REVENUE Nature of Performance Obligations Our products are distributed through three distinct channels, which represent our business 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., the U.K., and other international markets such as Europe. 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 Outdoor Gear Store. Our Contract Manufacturing segment 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. Significant Accounting Policies and Judgments Revenue is recognized when the performance obligations under the terms of a contract with our customer are satisfied. The performance obligation is satisfied, and revenue is recorded when control passes to the customer, which is generally upon shipment to the customer or at the time of sale for our retail store customers. Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of our products, which is the net sales price. The net sales price includes estimates of variable consideration for which reserves may be established. Components of variable consideration include discounts and allowances, customer rebates, markdowns, and product returns. These reserves are based on the amounts earned, or to be claimed, on the related sales of our products. Elements of variable consideration including discounts, allowances, and rebates are determined at contract inception and are reassessed at each reporting date, at a minimum, to reflect any change in the types of variable consideration offered to the customer. We determine estimates of variable consideration based on evaluations of each type of variable consideration and customer contract, historical and anticipated trends, and current economic conditions. Overall, these reserves reflect our best estimates of the amount of consideration to be earned on the related sales. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net revenue and earnings in the period such variances become known. Our estimated sales returns are based on historical customer return data and known or anticipated returns not yet received from customers. Actual returns in any future period are inherently uncertain and thus may differ from estimates recorded. If actual or expected future returns are significantly higher or lower than the established reserves, a reduction or increase to net revenues is recorded in the period in which the determination is made. 7 Table of Contents From time to time, we enter into non-cancellable contracts with the U.S. Military and other customers with a duration of one year or less. The contractual minimum payments under such contracts may result in current contract receivable balances. 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, 2026 , December 31, 2025 and June 30, 2025 , there were no contract receivable or contract liability balances outstanding. Disaggregation of Revenue All revenues are recognized at a point in time when control of our products pass to the customer at point of shipment or point of sale for retail store customers. Because all revenues are recognized at a point in time and are disaggregated by channel, our segment disclosures are consistent with disaggregation requirements. See Note 13 - Segment Information for segment disclosures. 5. TRADE RECEIVABLES We maintain an allowance for credit losses resulting from the inability of our customers to make required payments. We calculate the allowance based on historical experience, the age of the receivables, receivable insurance status, and identification of customer accounts that are likely to prove difficult to collect due to various criteria including pending bankruptcy. Estimates of the allowance in any future period are inherently uncertain and actual allowances may differ from these estimates. If actual or expected future allowances were significantly greater or less than established reserves, a reduction or increase to bad debt expense would be recorded in the period this determination was made. 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 approximat ely $ 0.8 million, $ 0.7 million, and $ 0.8 million at June 30, 2026 , December 31, 2025 , and June 30, 2025 , respectively. 8 Table of Contents 6. INVENTORY Inventories are comprised of the following: June 30, December 31, June 30, ($ in thousands) 2026 2025 2025 Finished goods $ 149,466 $ 161,770 $ 169,710 Raw materials 22,943 18,776 16,313 Work-in-process 1,116 588 813 Total $ 173,525 $ 181,134 $ 186,836 The asset associated with our returns reserve included within inventories wa s approximatel y $ 0.9 mill ion, $ 1.1 million, and $ 0.9 million as of June 30, 2026 , December 31, 2025 , and June 30, 2025 , respectively. 7. GOODWILL & IDENTIFIED INTANGIBLE ASSETS There was no change in goodwill during the six months ended June 30, 2026 . Intangible assets other than goodwill at the respective balance sheet dates consisted of the following: June 30, 2026 Gross Accumulated Accumulated Carrying ($ in thousands) Amount Amortization Impairment (1) Amount Indefinite-lived intangible assets Trademarks $ 78,654 $ ( 4,000 ) $ 74,654 Intangible assets subject to amortization Patents 895 $ ( 879 ) - 16 Customer relationships 41,659 ( 14,690 ) - 26,969 Total intangible assets other than goodwill $ 121,208 $ ( 15,569 ) $ ( 4,000 ) $ 101,639 ( 1 ) Relates to the impairment of the Muck brand for the year ended December 31, 2024. December 31, 2025 Gross Accumulated Accumulated Carrying ($ in thousands) Amount Amortization Impairment (1) Amount Indefinite-lived intangible assets Trademarks $ 78,654 $ ( 4,000 ) $ 74,654 Intangible assets subject to amortization Patents 895 $ ( 875 ) - 20 Customer relationships 41,659 ( 13,300 ) - 28,359 Total intangible assets other than goodwill $ 121,208 $ ( 14,175 ) $ ( 4,000 ) $ 103,033 ( 1 ) Relates to the impairment of the Muck brand for the year ended December 31, 2024. June 30, 2025 Gross Accumulated Accumulated Carrying ($ in thousands) Amount Amortization Impairment (1) Amount Indefinite-lived intangible assets Trademarks $ 78,654 $ ( 4,000 ) $ 74,654 Intangible assets subject to amortization Patents 895 $ ( 868 ) - 27 Customer relationships 41,659 ( 11,912 ) - 29,747 Total intangible assets other than goodwill $ 121,208 $ ( 12,780 ) $ ( 4,000 ) $ 104,428 ( 1 ) Relates to the impairment of the Muck brand for the year ended December 31, 2024. 9 Table of Contents The weighted average remaining life of patents and customer relationships is 2.0 years and 9.8 years, respectively. Amortization expense for intangible assets subject to amortization for each of the three months ended June 30, 2026 and 2025 was $ 0.7 million. Amortization expense for intangible assets subject to amortization for the six months ended June 30, 2026 and 2025 was $ 1.4 million. As of June 30, 2026 , a schedule of approximate expected remaining amortization expense related to intangible assets for the years ending December 31 is as follows: Amortization ($ in thousands) Year Expense 2026 $ 1,394 2027 2,785 2028 2,781 2029 2,779 2030 2,778 2031+ 14,468 Total $ 26,985 8. ACCRUED EXPENSES AND OTHER LIABILITIES Amounts reported in "Accrued expenses and other liabilities" within the accompanying Unaudited Condensed Consolidated Balance Sheets were: June 30, December 31, June 30, ($ in thousands) 2026 2025 2025 Accrued expenses and other liabilities: Accrued tariffs and duties $ 10,381 $ 15,272 $ 9,878 Operating lease liability 2,509 2,651 2,808 Salaries and wages 2,958 5,336 3,774 Returns liability 1,649 2,123 1,544 Income taxes payable 2,085 - 871 Other 7,177 9,431 6,056 Total accrued expenses and other liabilities $ 26,759 $ 34,813 $ 24,931 9. LONG-TERM DEBT On April 26, 2024, we refinanced our previous term debt and asset-based lending credit facilities by amending and restating our credit agreement with Bank of America, N.A., as agent, sole lead arranger and sole bookrunner and other lenders party thereto (the "ABL Agreement"). The ABL Agreement consists of a $ 175.0 million asset-based lending credit facility (the "ABL Facility") and a $ 50.0 million term loan facility (the "Term Facility"). 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 receivable and inventory balances. As of June 30, 2026 , we had borrowing capacity of $ 46.3 million 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. 10 Table of Contents 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: Revolver Pricing Level Average Availability as a Percentage of Commitments Term SOFR Term Loan Base Rate Term Loan Term SOFR Revolver Loan Base Rate Revolver Loan Term SOFR FILO Loan Base Rate FILO Loan I > 66.7% 2.75 % 1.50 % 1.25 % 0.00 % 1.75 % 0.50 % II >33.3% and < or equal to 66.7% 3.00 % 1.50 % 1.50 % 0.00 % 2.00 % 0.50 % III < 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: June 30, December 31, June 30, ($ in thousands) 2026 2025 2025 Term Facility that matures in 2029 with an effective interest rate of 7.00 % as of June 30, 2026, 7.50 % as of December 31, 2025 and 7.69 % as of June 30, 2025, respectively $ 22,581 $ 26,762 $ 30,942 ABL Facility that matures in 2029: SOFR borrowings with an effective interest rate of 5.51 % as of June 30, 2026, 5.62 % as of December 31, 2025 and 6.22 % as of June 30, 2025, respectively 100,500 94,300 103,300 Prime borrowings with an effective interest rate of 7.18 % as of June 30, 2026, 7.16 % as of December 31, 2025 and 7.94 % as of June 30, 2025, respectively 790 3,321 288 Total debt 123,871 124,383 134,530 Less: Unamortized debt issuance costs ( 1,480 ) ( 1,741 ) ( 2,002 ) Total debt, net of debt issuance costs 122,391 122,642 132,528 Less: Debt maturing within one year ( 8,361 ) ( 8,361 ) ( 8,361 ) Long-term debt $ 114,030 $ 114,281 $ 124,167 A schedule of debt payments for the next five years is as follows: Debt Payment ($ in thousands) Year Schedule 2026 $ 4,181 2027 8,361 2028 8,361 2029 102,968 Total $ 123,871 Credit Facility Covenants Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. The ABL Facility and Term Facility also contain restrictions on the amount of dividend payments and share repurchases. As of June 30, 2026 , we were in compliance with all credit facility covenants. 10. TAXES The effective tax rate for the three months ended June 30, 2026 and 2025 was 21.5 % and 22.2 %, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 21.5 % and 22.2 %, respectively. 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. There can be no assurance that the effective tax rate estimated for interim financial reporting purposes will approximate the effective tax rate determined at fiscal year-end. The Company files income tax returns in the U.S. for federal, state, and local purposes, and in certain foreign jurisdictions. The Company's tax years 2019 through 2025 remain open to examination by most taxing authorities. Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. No material expenses were recognized during the three and six months ended June 30, 2026 and 2025 . We do not believe there will be any material changes in our uncertain tax positions over the next 12 months. 11 Table of Contents 11. EARNINGS PER SHARE Basic earnings per share ("EPS") is computed by dividing net income applicable to common shareholders by the weighted average number of common shares outstanding during each period. 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 is as follows: Three Months Ended Six Months Ended June 30, June 30, (shares in thousands) 2026 2025 2026 2025 Basic - weighted average shares outstanding 7,509 7,461 7,522 7,460 Dilutive restricted share units 52 26 50 24 Dilutive stock options 37 6 35 9 Diluted - weighted average shares outstanding 7,598 7,493 7,607 7,493 Anti-dilutive securities 89 179 89 179 12. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow information for the six months ended June 30, 2026 and 2025 is as follows: Six Months Ended June 30, ($ in thousands) 2026 2025 Interest paid $ 3,363 $ 4,593 Federal, state, and local income taxes paid, net $ 1,091 $ 1,639 Property, plant, and equipment purchases in accounts payable $ 1,110 $ 800 Right-of-use assets obtained in exchange for operating lease liabilities, net of terminations $ 4,706 $ 57 13. SEGMENT INFORMATION Reportable Segments - We have identified three reportable segments: Wholesale, Retail, and Contract Manufacturing. Wholesale. In our Wholesale segment, our products are offered in over 10,000 retail locations representing a wide range of distribution channels in the U.S., the U.K., and other international markets, mainly in Europe. 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. Retail. 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. Contract Manufacturing. In our Contract Manufacturing segment, we include 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. Net sales to foreign countries represented approximately 2.3 % and 3.6 % of net sales for the three months ended June 30, 2026 and 2025 , respectively. Net sales to foreign countries represented approximately 2.1 % and 2.8 % of net sales for the six months ended June 30, 2026 and 2025 , 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. Our CODM also uses results of net sales and gross margin to evaluate segment performance and allocate resources as the primary metrics for overall segment evaluation. Operating expenses such as warehousing, distribution, marketing, and other key activities supporting our operations are integrated to maximize efficiency and productivity; therefore, we do not include these expenses within our segment results but instead review them at the consolidated level. 12 Table of Contents 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, 2026 and 2025 : Three Months Ended Six Months Ended June 30, June 30, ($ in thousands) 2026 2025 2026 2025 NET SALES: Wholesale $ 78,830 $ 73,092 $ 157,221 $ 147,877 Retail 36,245 29,746 78,943 66,386 Contract Manufacturing 3,293 2,809 6,605 5,457 Total Net Sales $ 118,368 $ 105,647 $ 242,769 $ 219,720 COST OF GOODS SOLD: Wholesale $ 38,195 $ 43,614 $ 89,626 $ 88,289 Retail 16,384 16,291 40,912 36,186 Contract Manufacturing 2,985 2,461 5,993 4,956 Total Cost of Goods Sold $ 57,564 $ 62,366 $ 136,531 $ 129,431 GROSS MARGIN: Wholesale $ 40,636 $ 29,478 $ 67,596 $ 59,588 Retail 19,861 13,455 38,031 30,200 Contract Manufacturing 307 348 611 501 Total Gross Margin $ 60,804 $ 43,281 $ 106,238 $ 90,289 Segment asset information is not prepared or used to assess segment performance. 14. COMMITMENTS AND CONTINGENCIES Litigation The Company is involved in legal proceedings in the ordinary course of business. Unless otherwise stated, we believe that the likelihood of the resolution being materially adverse to our financial statements is remote and as such have not recorded any contingent liabilities within the accompanying Unaudited Condensed Consolidated Financial Statements. Gain Contingency In June 2022, we became aware of a misclassification of Harmonized Tariff Schedule (HTS) codes filed with the U.S. Customs and Border Protection (U.S. Customs) on certain products imported into the U.S. during 2021 and 2022 associated with brands acquired through an acquisition in the first quarter of 2021. As a result of the misclassification of HTS codes on these products, we believe that we have paid duties in excess of the expected amount due. 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, 2026 and June 30, 2025 . 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. Refunds received will be recognized as a reduction to the cost of goods sold when, and if, the refunds are received. 15. SUBSEQUENT EVENTS Subsequent to June 30, 2026, we have received approximately $ 8.2 million of the $ 16.8 million IEEPA tariff receivable included within "other receivables" within the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026. 13 Table of Contents