Rocky Brands Inc (RCKY) 2022 Q4 法說會逐字稿

Greetings, and welcome to the Rocky Brands Fourth Quarter Fiscal 2022 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎來到 Rocky Brands 2022 財年第四季度收益電話會議。 （操作員說明）提醒一下，正在錄製此會議。

It is now my pleasure to introduce your host, Brendon Frey of ICR. Thank you, sir. You may begin.

現在我很高興向您介紹主持人，ICR 的 Brendon Frey。謝謝你，先生。你可以開始了。

Thank you, and thanks to everyone joining us today.

謝謝你們，也感謝今天加入我們的每一個人。

Before we begin, please note that today's session, including the Q&A period, may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such statements are based on information and assumptions available at this time and are subject to changes, risks and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of the risks and uncertainties, please refer to today's press release and our reports filed with the Securities and Exchange Commission, including our 10-K for the year ended December 31, 2021.

在我們開始之前，請注意今天的會議，包括問答環節，可能包含 1995 年《私人證券訴訟改革法案》定義的前瞻性陳述。此類陳述基於目前可用的信息和假設，可能會發生變化、風險和不確定性，這可能導致實際結果存在重大差異。我們不承擔更新此類聲明的義務。有關風險和不確定性的完整討論，請參閱今天的新聞稿和我們向美國證券交易委員會提交的報告，包括我們截至 2021 年 12 月 31 日止年度的 10-K 報告。

I'll now turn the conference over to Jason Brooks, Chief Executive Officer of Rocky Brands.

我現在將會議轉交給 Rocky Brands 的首席執行官 Jason Brooks。

Thank you, Brendon. With me on today's call is Tom Robertson.

謝謝你，布倫登。和我一起參加今天電話會議的是湯姆·羅伯遜 (Tom Robertson)。

Throughout 2022, we experienced sustained consumer demand for our portfolio of leading brands that span multiple categories like work, outdoor and western. Our functional footwear offered an accessible price point, and more needs-based categories have provided a degree of insulation from the inflation-driven pullback in consumer spending that intensified as the year progressed.

在整個 2022 年，我們經歷了消費者對我們跨越工作、戶外和西部等多個類別的領先品牌組合的持續需求。我們的功能性鞋類提供了一個可以接受的價格點，更多基於需求的類別在一定程度上抵禦了通脹驅動的消費支出回落，這種回落隨著時間的推移而加劇。

2022 was also a year in which we heightened our efforts around efficiencies and profitability. We made important infrastructure investments to support growth in late 2021 and early 2022, most notably the opening of a new distribution and fulfillment center in Reno, Nevada. And following the successful integration of the performance and lifestyle footwear business we acquired from Honeywell, we identified a number of operational synergies and cost savings opportunities that took action in 2022 that will result in approximately $3 million to $4 million in annualized savings.

2022 年也是我們加強效率和盈利能力的一年。我們進行了重要的基礎設施投資以支持 2021 年底和 2022 年初的增長，最引人注目的是在內華達州里諾開設了一個新的配送和履行中心。在成功整合我們從霍尼韋爾收購的性能和生活方式鞋類業務之後，我們確定了一些運營協同效應和成本節約機會，這些機會在 2022 年採取了行動，每年將節省約 300 萬至 400 萬美元。

Finally, we strengthened our organization with some key hires and promotions. As we announced in October, Tom was elevated to the newly created role of Chief Operating Officer and is now overseeing the day-to-day business operations of the company. We recently hired Tom's successor, CFO and Treasurer role, Sarah O'Connor. Sarah brings a wealth of finance expertise to the team and her track record of work with public companies in the retail and manufacturing space will be immediately additive to our leadership team. We are thrilled to have Sarah join the Rocky Brands team in the coming weeks, and we look forward to introducing her to our investor community on our next earnings call. We have also hired a new VP of Manufacturing and continue to evaluate ways to further strengthen our organization and leadership team.

最後，我們通過一些關鍵的招聘和晉升加強了我們的組織。正如我們在 10 月份宣布的那樣，Tom 被提升為新設立的首席運營官一職，目前負責監督公司的日常業務運營。我們最近聘請了 Tom 的繼任者、首席財務官兼財務主管 Sarah O'Connor。 Sarah 為團隊帶來了豐富的財務專業知識，她在零售和製造領域與上市公司的合作記錄將立即為我們的領導團隊增色不少。我們很高興 Sarah 在未來幾週內加入 Rocky Brands 團隊，我們期待在下一次財報電話會議上將她介紹給我們的投資者社區。我們還聘請了一位新的製造副總裁，並繼續評估進一步加強我們的組織和領導團隊的方法。

Shifting to our fourth quarter results. While we expected sales to be down year-over-year due to the difficult comparisons, we were pleased to deliver results that were ahead of expectations. Our ongoing efforts to restructure and refocus our Lehigh B2B channel, combined with the enhancements we've made to our e-commerce sites and digital marketing programs, drove significant outperformance in our retail channel this quarter. Compared to a year ago period, we saw a more than 40% increase in our B2B business and nearly 46% increase in our direct-to-consumer business. This resulted in a more favorable channel mix that helped drive gross margins higher than planned.

轉向我們的第四季度業績。由於比較困難，我們預計銷售額將同比下降，但我們很高興交付了超出預期的結果。我們不斷努力重組和重新調整我們的 Lehigh B2B 渠道，再加上我們對電子商務網站和數字營銷計劃所做的改進，推動了本季度零售渠道的顯著表現。與去年同期相比，我們的 B2B 業務增長了 40% 以上，直接面向消費者的業務增長了近 46%。這導致了更有利的渠道組合，有助於推動毛利率高於計劃。

The strength in our Retail segment helped partially offset expected softness in wholesale sales following last year's exceptionally strong performance. As a reminder, last year, there was a significant shift in orders out of third quarter into both fourth quarter 2021 and first quarter 2022 as a result of temporary logistic challenges we encountered in our distribution center.

繼去年異常強勁的表現後，我們零售部門的實力幫助部分抵消了預期的批發銷售疲軟。提醒一下，去年，由於我們在配送中心遇到的臨時物流挑戰，訂單從第三季度顯著轉移到 2021 年第四季度和 2022 年第一季度。

Before I hand it over to Tom to cover the numbers in more details, I want to spend a few minutes reviewing some of the drivers of our recent performance, starting with our work category portfolio of brands.

在我將其交給 Tom 以更詳細地介紹這些數字之前，我想花幾分鐘時間回顧一下我們最近業績的一些驅動因素，從我們的工作類別品牌組合開始。

Though the broader economy has slowed and the competitive environment is back to pre-pandemic conditions, demand for our work product has been resilient. Overall, work posted modest growth over the fourth quarter of 2021 despite the more challenging operating environment. Work is our largest category, accounting for approximately 42% of the annual revenues as we compete in the estimated $20 billion work footwear end market with our Georgia, Rocky, Muck and XTRATUF brands in wholesale as well as our Lehigh B2B business.

儘管整體經濟放緩，競爭環境又回到大流行前的狀態，但對我們工作產品的需求一直保持彈性。總體而言，儘管經營環境更具挑戰性，但 2021 年第四季度的工作仍實現了溫和增長。工作是我們最大的類別，約佔年收入的 42%，因為我們在估計 200 億美元的工作鞋終端市場與我們的 Georgia、Rocky、Muck 和 XTRATUF 品牌在批發以及我們的 Lehigh B2B 業務中競爭。

Georgia had a solid fourth quarter. While some large key account customers slowed orders due to general inventory constraints, new growth with field customers and further penetration into the farm and ranch segment more than made up for the shortfall. Rocky Work was up nicely, growing strong double digits, driven by key new customer programs and demand for our work product from both e-commerce and traditional retail outlets.

佐治亞州第四節表現穩定。雖然一些大客戶由於一般庫存限製而放緩訂單，但現場客戶的新增長以及對農場和牧場領域的進一步滲透彌補了不足。 Rocky Work 增長良好，增長強勁，兩位數，這主要得益於關鍵的新客戶計劃以及電子商務和傳統零售店對我們工作產品的需求。

Demand for both Muck and XTRATUF continues to be strong, and we are very optimistic about new product ahead as these brands continue to grow into new niches and resonate with customers. While demand was positive, we did see overall mix results in our rubber work boot segment, largely due to comparability issues stemming from outperformance this time last year.

對 Muck 和 XTRATUF 的需求持續強勁，我們對未來的新產品非常樂觀，因為這些品牌繼續發展到新的利基市場並引起客戶的共鳴。雖然需求是積極的，但我們確實看到了橡膠工作靴部分的整體組合結果，這主要是由於去年這個時候表現出色而導致的可比性問題。

As you recall, the distribution center issues we experienced last year limited our online selection and pushed inventory and sales from the third quarter into the fourth quarter of 2021. From a channel perspective, we were encouraged by very strong full price selling online, particularly for the Muck product. Our Muck and XTRATUF e-commerce sites both saw mid-double-digit increases in the fourth quarter.

您還記得，我們去年遇到的配送中心問題限制了我們的在線選擇，並將庫存和銷售從第三季度推到了 2021 年第四季度。從渠道的角度來看，我們受到非常強勁的在線全價銷售的鼓舞，尤其是馬克產品。我們的 Muck 和 XTRATUF 電子商務網站在第四季度均實現了中兩位數的增長。

Shifting to our western business, which delivered robust growth in the fourth quarter, retail demand was very strong as the market continues to trend positively in men's western category, which is a significant portion of our Durango business. The largest piece of our western business delivered high single-digit growth as our teams maintained a very good inventory position to support retailers' needs throughout the holiday season, allowing us to continue to gain market share. The Rocky Western business was relatively flat compared to the fourth quarter of 2021 driven by solid results with key partners that allowed us to approximate last year's overperformance that resulted from inventory shortages from key competitors.

轉向我們的西部業務，該業務在第四季度實現了強勁增長，零售需求非常強勁，因為男士西部市場繼續呈積極趨勢，這是我們杜蘭戈業務的重要組成部分。我們最大的西部業務實現了高個位數增長，因為我們的團隊保持了非常好的庫存狀況，可以在整個假期期間支持零售商的需求，從而使我們能夠繼續獲得市場份額。與 2021 年第四季度相比，Rocky Western 業務相對持平，這得益於主要合作夥伴的穩健業績，這使我們能夠接近去年因主要競爭對手庫存短缺而導致的超額業績。

Overall, we spent a large part of the past year taking significant share in the western category due to competitor supply chain issues, resulting in empty shelf space. While the supply chain dynamic has now normalized, we are pleased to have been able to maintain our market share gains with our wholesale partners and core retail customer set.

總體而言，由於競爭對手供應鏈問題，我們在過去一年的大部分時間裡佔據了西部品類的很大份額，導致貨架空間空置。雖然供應鏈動態現已正常化，但我們很高興能夠與我們的批發合作夥伴和核心零售客戶群保持市場份額增長。

Turning to outdoor, which includes styles under our Rocky, Muck and XTRATUF brands, this category faced the most significant headwinds in the fourth quarter. Early shipments in the third quarter of this year, combined with warehouse delays leading to increased product shipments in the fourth quarter of 2021, significantly impacted the comparability to the prior year. Additionally, less than favorable weather conditions across most of the country led to limited fill-ins or new orders for insulated hunting product.

轉向戶外，包括我們的 Rocky、Muck 和 XTRATUF 品牌下的款式，該類別在第四季度面臨著最重大的阻力。今年第三季度的提前發貨，加上倉庫延遲導致 2021 年第四季度產品發貨量增加，顯著影響了與上一年的可比性。此外，全國大部分地區的天氣條件都不太有利，導致絕緣狩獵產品的填寫或新訂單有限。

With respect to our commercial military and duty footwear, we saw mixed trends in the fourth quarter. Starting with commercial military, we experienced year-over-year order declines largely due to enlistment trends. The military has experienced a 40% decrease in new recruits over the past year, reducing their need for new boot orders. Additionally, an ordering system glitch with the Navy Exchange impacted inbound order rates during the quarter. This issue has been remedied, and the volumes have since normalized. Meanwhile, duty sales remained flat as we continue to see strength of our Code Red program that has delivered important gains in the firefighting footwear space.

關於我們的商業軍用和值班鞋類，我們在第四季度看到了混合趨勢。從商業軍事開始，我們的訂單同比下降主要是由於入伍趨勢。軍隊在過去一年中新兵減少了 40%，減少了他們對新兵訂單的需求。此外，海軍交易所的訂購系統故障影響了本季度的入站訂單率。此問題已得到解決，卷已正常化。與此同時，關稅銷售額保持平穩，因為我們繼續看到我們的 Code Red 計劃的實力，該計劃在消防鞋領域取得了重要進展。

As I mentioned at the start of the call, Lehigh, our B2B business, had a tremendous quarter. We saw significant growth in both new and existing accounts with significant acceleration as the quarter progressed. This growth was enabled by the restructuring and aligning of our internal sales and service teams that allow us to maintain a greater focus on account retention and growth over the past year. Additionally, we continue to see employers embrace employee PPE, such as footwear, orthotics and compression socks, as a method of driving employee retention in this tight labor market. In fact, we continue to see a significant number of customers grow the individual subsidy for each employee, which we believe will drive new opportunities for popular, higher-priced products going forward.

正如我在電話會議開始時提到的，我們的 B2B 業務 Lehigh 有一個巨大的季度。隨著本季度的進展，我們看到新客戶和現有客戶都出現了顯著增長，並出現了顯著加速。這一增長得益於我們內部銷售和服務團隊的重組和調整，使我們能夠在過去一年中更加關注客戶保留和增長。此外，我們繼續看到雇主採用員工個人防護裝備，例如鞋類、矯形器和壓縮襪，以此作為在這個緊張的勞動力市場中留住員工的一種方法。事實上，我們繼續看到大量客戶增加了對每位員工的個人補貼，我們相信這將為未來流行的高價產品帶來新的機會。

Though we were tested by inflationary pressure and declining consumer segment throughout 2022, overall, I'm very pleased with the resiliency of the demand we've seen for our portfolio of brands and our ability to meet that demand with excellent supply chain management. As the macroeconomic uncertainty that we've experienced this past year hopefully becomes clearer in 2023, I'm confident that we are well positioned to take advantage of opportunities where we find them and that we will continue to enhance our efficiencies and profitability measures through the areas of our business that are within our control.

儘管我們在整個 2022 年都受到了通貨膨脹壓力和消費者群體下降的考驗，但總的來說，我對我們對品牌組合的需求彈性以及我們通過出色的供應鏈管理滿足該需求的能力感到非常滿意。由於我們過去一年經歷的宏觀經濟不確定性有望在 2023 年變得更加清晰，我相信我們已做好充分準備，可以利用我們發現的機會，並且我們將繼續通過以下方式提高我們的效率和盈利能力措施我們控制範圍內的業務領域。

And finally, I want to thank the entire Rocky Brands, Inc. team for their hard work and dedication over the past year. I'm incredibly proud of what we are able to accomplish this year together, and I look forward to continuing success in 2023.

最後，我要感謝整個 Rocky Brands, Inc. 團隊在過去一年的辛勤工作和奉獻精神。我為我們今年能夠共同取得的成就感到無比自豪，我期待著在 2023 年繼續取得成功。

I will now turn the call over to Tom.

我現在將電話轉給湯姆。

Thanks, Jason. As Jason mentioned, while the decline in net sales was expected from the shift in orders into the fourth quarter last year, we were pleased to outperform the projections we had as we entered the quarter. Net sales for the fourth quarter of 2022 were $138.9 million, a decrease of $30.5 million or 18% compared to a year-ago period. By segment, as reported, wholesale sales decreased 26.6% to $98.9 million. Retail sales increased 40.8% to $37.3 million. And contract manufacturing sales decreased 66.6% to $2.7 million.

謝謝，傑森。正如 Jason 所提到的，雖然去年第四季度的訂單轉移預計會導致淨銷售額下降，但我們很高興在進入本季度時的表現超出了我們的預期。 2022 年第四季度的淨銷售額為 1.389 億美元，同比減少 3050 萬美元或 18%。據報導，按部門劃分，批發銷售額下降 26.6% 至 9890 萬美元。零售額增長 40.8% 至 3730 萬美元。合同製造銷售額下降 66.6% 至 270 萬美元。

Gross profit in the fourth quarter decreased 10.4% to $56.7 million or 40.8% of sales compared to $63.3 million or 37.3% of sales in the same period last year. The 350 basis point increase in gross margin was due to 3 separate factors. 170 basis points of improvement was due to a net $2.4 million benefit we received in the quarter from a tariff-related reimbursement, resulting from an overpayment in early 2022. The remaining improvement was primarily attributable to a higher mix of higher-margin Retail segment sales compared with the year-ago period. When normalized for this temporary benefit, fourth quarter gross margins were 39.1%. In addition to increasing adjusted gross margins 180 basis points year-over-year, they are up 380 basis points from Q3 2022 and 590 basis points from Q2 2022 as price actions we took at September 1 have helped offset higher freight and logistics costs.

第四季度毛利下降 10.4% 至 5670 萬美元，佔銷售額的 40.8%，而去年同期為 6330 萬美元，佔銷售額的 37.3%。毛利率增加 350 個基點是由於 3 個獨立的因素。 170 個基點的改善是由於我們在本季度從與關稅相關的報銷中獲得了 240 萬美元的淨收益，這是由於 2022 年初的多付款項造成的。其餘的改善主要歸因於更高利潤率的零售部門銷售的更高組合與去年同期相比。將此臨時收益標準化後，第四季度毛利率為 39.1%。除了調整後的毛利率同比增長 180 個基點外，它們比 2022 年第三季度增長了 380 個基點，比 2022 年第二季度增長了 590 個基點，因為我們在 9 月 1 日採取的價格行動幫助抵消了較高的運費和物流成本。

Wholesale gross margins, excluding the net impact of the tariff-related reimbursements, were 34.3% compared with 34.9% in the prior year. Retail gross margins were 53.2% compared to 53.8%. And contract manufacturing gross margins were 22.2% versus 24.8% in the fourth quarter of 2021.

排除關稅相關報銷的淨影響，批發毛利率為 34.3%，上年同期為 34.9%。零售毛利率分別為 53.2% 和 53.8%。合同製造毛利率為 22.2%，而 2021 年第四季度為 24.8%。

Selling, general and administrative expenses were $43.1 million or 31% of net sales in the fourth quarter of 2022 compared to $45.1 million or 26.6% of net sales last year. Excluding the $1.7 million of acquisition-related amortization and restructuring costs in the fourth quarter of 2022 and $1.6 million in acquisition-related amortization and integration expenses for the fourth quarter of 2021, adjusted operating expenses were $41.4 million in the current year period and $43.5 million in the year ago period. The decrease in operating expenses was primarily driven by a decrease in discretionary spending and improved distribution center efficiencies compared with the year ago period. As a percentage of net sales, adjusted operating expenses increased to 29.8% in the fourth quarter of 2022 compared with 25.7% in the year-ago period driven by a higher mix of retail sales in the current quarter.

2022 年第四季度的銷售、一般和管理費用為 4310 萬美元，占淨銷售額的 31%，而去年為 4510 萬美元，占淨銷售額的 26.6%。不包括 2022 年第四季度 170 萬美元的收購相關攤銷和重組成本和 2021 年第四季度 160 萬美元的收購相關攤銷和整合費用，本年度調整後的運營費用為 4140 萬美元和 4350 萬美元在去年同期。與去年同期相比，運營費用的減少主要是由於可自由支配支出的減少和配送中心效率的提高。作為淨銷售額的百分比，調整後的運營費用在 2022 年第四季度從去年同期的 25.7% 增加到 29.8%，這是由於本季度零售銷售的更高組合。

Income from operations decreased to $13.6 million or 9.8% of net sales compared to $18.2 million or 10.7% of net sales in the year-ago period. On an adjusted basis, operating margins were 11.0% versus 11.7%.

運營收入下降至 1360 萬美元或淨銷售額的 9.8%，而去年同期為 1820 萬美元或淨銷售額的 10.7%。在調整後的基礎上，營業利潤率分別為 11.0% 和 11.7%。

For the fourth quarter of this year, interest expense was $5.9 million compared with $3.2 million a year ago. The increase was driven by increased interest rates on interest payments on both our senior term loan and credit facility.

今年第四季度，利息支出為 590 萬美元，而一年前為 320 萬美元。增加的原因是我們的高級定期貸款和信貸安排的利息支付利率增加。

On a GAAP basis, net income for the quarter decreased to $6.5 million or $0.89 per diluted share compared to net income of $12.5 million or $1.69 per diluted share in the year-ago period. Adjusted net income for the fourth quarter of this year, which excludes acquisition-related amortization and restructuring costs, was $7.9 million or $1.08 per diluted share compared to adjusted net income of $13.8 million or $1.86 per diluted share in the fourth quarter of 2021.

根據 GAAP，本季度淨收入下降至 650 萬美元或稀釋後每股收益 0.89 美元，而去年同期的淨收入為 1250 萬美元或稀釋後每股收益 1.69 美元。今年第四季度的調整後淨收入（不包括與收購相關的攤銷和重組成本）為 790 萬美元或攤薄後每股收益 1.08 美元，而 2021 年第四季度的調整後淨收入為 1380 萬美元或攤薄後每股收益 1.86 美元。

For the full year, 2022 was another solid year for Rocky Brands. Despite the short-term profitability issues stemming from the ramp-up of our Reno distribution facility and higher inbound logistics costs, demand was very strong, and we navigated a challenging macroeconomic environment adeptly.

就全年而言，2022 年對 Rocky Brands 來說又是豐收的一年。儘管我們的里諾配送設施的擴建和更高的入站物流成本導致了短期盈利問題，但需求非常強勁，我們巧妙地應對了充滿挑戰的宏觀經濟環境。

For the full year, net sales increased 19.7% to a record $615.5 million or $611.9 million on an adjusted basis, reflecting strong double-digit growth in both our wholesale and retail channel fueled by strong demand. By segment, wholesale sales increased $93.7 million or 24%. Retail sales were up $20.7 million or 21.9%. And contract manufacturing decreased by $13.2 million or 46.2%.

全年淨銷售額增長 19.7% 至創紀錄的 6.155 億美元或調整後的 6.119 億美元，反映出在強勁需求的推動下，我們的批發和零售渠道實現了兩位數的強勁增長。按部門劃分，批發銷售額增加了 9370 萬美元或 24%。零售額增長了 2070 萬美元或 21.9%。合同製造減少了 1320 萬美元或 46.2%。

In terms of profitability, adjusted operating income decreased 5.5% to $48.6 million, adjusted net income decreased 26% to $24.1 million and adjusted EPS declined 25.5% to $3.27.

盈利能力方面，調整後營業收入下降 5.5% 至 4860 萬美元，調整後淨收入下降 26% 至 2410 萬美元，調整後每股收益下降 25.5% 至 3.27 美元。

For the full year, interest expense was $18.3 million, an increase of 72.3% compared with $10.6 million in 2021. And our effective tax rate for 2022 increased to 20.6% compared to 19.0% in the prior year.

全年利息支出為 1830 萬美元，比 2021 年的 1060 萬美元增長 72.3%。我們 2022 年的有效稅率從上一年的 19.0% 增至 20.6%。

Turning to our balance sheet. At the end of 2022, cash and cash equivalents stood at $5.7 million. And our debt totaled $256.9 million, consisting of our $116 million senior term loan facility and borrowings under our senior secured asset-backed credit facility. During the fourth quarter, we paid down approximately $27.9 million or 9.8% of total debt from September 30, 2022.

轉向我們的資產負債表。到 2022 年底，現金和現金等價物為 570 萬美元。我們的債務總額為 2.569 億美元，包括 1.16 億美元的高級定期貸款和高級有擔保資產支持信貸額度下的借款。在第四季度，我們從 2022 年 9 月 30 日開始償還了約 2790 萬美元或總債務的 9.8%。

Inventory at year-end was $235.4 million, relatively flat when compared to $232.5 million a year ago. Compared with June 30, 2022 and September 30, 2022, inventories at December 31 were down 18.2% and 11.2%, respectively, and this was ahead of our stated goal to bring inventories down $40 million from their high at the end of the second quarter. We feel very good about the quality of our inventory. And given the functional nature of our product, we see little risk for above-average markdowns.

年底庫存為 2.354 億美元，與一年前的 2.325 億美元相比持平。與 2022 年 6 月 30 日和 2022 年 9 月 30 日相比，12 月 31 日的庫存分別下降了 18.2% 和 11.2%，這超出了我們既定的目標，即使庫存從第二季度末的高點下降 4000 萬美元.我們對我們的庫存質量感到非常滿意。鑑於我們產品的功能性，我們認為降價幅度高於平均水平的風險很小。

Moving to our view of 2023. With the outlook for the economy uncertain and consumer discretionary spending still under pressure from inflation, we are approaching the upcoming year cautiously from a demand standpoint. We are forecasting net sales to range from $560 million to $570 million compared to net sales of $615.5 million in 2022, which included approximately $5 million from the onetime sale of NEOS inventory following our sale of the brand in September. It is also important to call out that we currently do not have any committed military contracts in 2023. And therefore, we have included no revenue from our Contract Manufacturing segment in this year's forecast, which compares to $15 million reported in 2022.

轉向我們對 2023 年的看法。由於經濟前景不明朗且消費者可自由支配支出仍面臨通脹壓力，我們從需求的角度謹慎對待來年。我們預測淨銷售額在 5.6 億美元至 5.7 億美元之間，而 2022 年的淨銷售額為 6.155 億美元，其中包括我們在 9 月份出售該品牌後一次性出售 NEOS 庫存的約 500 萬美元。同樣重要的是要指出，我們目前在 2023 年沒有任何承諾的軍事合同。因此，我們在今年的預測中沒有包括合同製造部門的收入，而 2022 年報告的收入為 1500 萬美元。

With respect to the shape of our business, following the impacts of COVID, our acquisition of the Honeywell footwear business and the disruption in our distribution center late in 2021, we expect the quarterly breakdown of revenue to start to resemble pre-pandemic percentages, meaning we will drive more volume in the second half of the year versus the first half of the year. Based on this, we expect sales to be down year-over-year in the first half as we lap tougher comparisons before returning to growth in the second half.

關於我們的業務形態，在 COVID 的影響、我們收購霍尼韋爾鞋類業務以及我們的配送中心在 2021 年底中斷之後，我們預計收入的季度細分將開始類似於大流行前的百分比，這意味著與上半年相比，我們將在今年下半年推動更多的銷量。基於此，我們預計上半年銷售額將同比下降，因為我們在下半年恢復增長之前進行更嚴格的比較。

We are optimistic that the price increases we took last fall, combined with current logistics and inbound freight costs, along with a more favorable segment mix, will drive gross margins to approximately 40% for the year compared to adjusted gross margins of 36.6% in 2022.

我們樂觀地認為，我們去年秋天的價格上漲，加上當前的物流和入境貨運成本，以及更有利的細分市場組合，將使今年的毛利率達到約 40%，而 2022 年調整後的毛利率為 36.6% .

Operating expenses will be fairly consistent with 2022's adjusted levels. So we'll see some modest deleverage year-over-year due to lower sales. We anticipate interest expense to be approximately $21 million in 2023 as our actions to pay down a portion of our debt are offset by higher interest rates compared with 2022.

運營支出將與 2022 年的調整後水平相當一致。因此，由於銷售額下降，我們將看到同比適度去槓桿化。我們預計 2023 年的利息支出約為 2100 萬美元，因為我們償還部分債務的行動被與 2022 年相比更高的利率所抵消。

Finally, we made good progress over the back half of 2022, bringing inventories down to more normalized levels. We have made further progress thus far in 2023, and we expect to end this year with inventories down approximately $45 million from the end of 2022. This will be a meaningful source of cash generation that will utilize to repay borrowings on our credit facility.

最後，我們在 2022 年下半年取得了良好進展，將庫存降至更正常的水平。到目前為止，我們在 2023 年取得了進一步進展，我們預計到今年年底，庫存將比 2022 年底減少約 4500 萬美元。這將是一個有意義的現金產生來源，將用於償還我們信貸額度的借款。

That concludes our prepared remarks. Operator, we are now ready for questions.

我們準備好的發言到此結束。接線員，我們現在準備好提問了。

(Operator Instructions) Our first question is from Jonathan Komp with Baird.

（操作員說明）我們的第一個問題來自 Jonathan Komp 和 Baird。

I want to, first, just start off with a question about the fourth quarter results in the Retail segment. Could you maybe just highlight how that business performed relative to your expectations? And then, of the drivers in the fourth quarter, what do you see as sustaining into 2023, if any, of the growth drivers that you highlighted?

首先，我想先問一個關於零售部門第四季度業績的問題。您能否強調該業務相對於您的預期表現如何？然後，在第四季度的驅動因素中，您認為哪些增長驅動因素會持續到 2023 年（如果有的話）？

Yes, John, thanks for the question and being on the call. So I just want to make sure that I'm clear. When you say retail, are you talking about our e-commerce business? Or are you talking about the Lehigh business?

是的，約翰，感謝您提出問題並接聽電話。所以我只想確保我清楚。當你說零售時，你是在說我們的電子商務業務嗎？或者你在談論 Lehigh 業務？

Yes, really both since you report them combined. If you want to talk to both, that would be great, but really, the segment that you reported.

是的，真的，因為您將它們合併報告。如果您想與兩者交談，那就太好了，但實際上，您報告的部分。

Got you. So I'll separate them just a little bit. We were really excited about what's happening with Lehigh. We have seen a big change, I think, because of COVID and how that affected businesses. And so our online option, the way we deliver to them has really become more popular. And so we're excited to see that. We think that we can continue to enhance that and make it more popular, adding some of the things, I think, you even talked about: arch supports and compression socks, along with the footwear. So we're pretty excited about that.

明白了所以我將它們分開一點。我們對 Lehigh 發生的事情感到非常興奮。我認為，由於 COVID 及其對企業的影響，我們已經看到了巨大的變化。因此，我們的在線選項，即我們向他們交付的方式確實變得更受歡迎。所以我們很高興看到這一點。我們認為我們可以繼續加強它並使其更受歡迎，添加一些東西，我想，你甚至談到過：足弓支撐和壓力襪，以及鞋類。所以我們對此感到非常興奮。

The e-commerce business was maybe a pleasant surprise. I mean we were tracking it and seeing nice increases, but it came in pretty significantly ahead of what we anticipated. And so that gives us a lot of courage that our brands are still in demand, right? Like, people still want the product, and so they're just buying them direct. So we will continue to drive that business. We think the e-commerce category, for us as a total, needs to be driven and really more important than we've probably given it in the past. So we're excited about it. I don't know if you had anything to add, Tom.

電子商務業務可能是一個驚喜。我的意思是我們正在跟踪它並看到不錯的增長，但它遠遠超出了我們的預期。因此，我們的品牌仍然有需求，這給了我們很大的勇氣，對吧？就像，人們仍然想要產品，所以他們只是直接購買。因此，我們將繼續推動該業務。我們認為電子商務類別，對我們來說，作為一個整體，需要被驅動，並且比我們過去可能給予的更重要。所以我們對此感到興奮。湯姆，我不知道你有沒有什麼要補充的。

Yes. I mean just to dive in a little bit on the detail, Jon, so 40%, 40.8% up in the retail category. The increases between Lehigh and e-commerce were almost the same. So they both grew approximately 40% in Q4. So we're very pleased with that. And then just to kind of reiterate or say in a different way Jason's comment on the e-commerce channel, we think that looking at the e-commerce business, that takes out kind of the inventory channel conflict that we have where the wholesale channel or segment is challenged by retailers and their inventory positions in the fourth quarter and a difficult comparison. And so the e-commerce kind of removes that inventory level at the retailer and speaks to the true demand for the brands.

是的。我的意思是只是深入了解細節，喬恩，零售類別增長了 40%，增長了 40.8%。 Lehigh 和電子商務之間的增幅幾乎相同。因此，它們在第四季度都增長了約 40%。所以我們對此非常滿意。然後只是重申或以不同的方式說 Jason 對電子商務渠道的評論，我們認為看看電子商務業務，這消除了我們在批發渠道或細分市場受到零售商的挑戰，他們在第四季度的庫存狀況和艱難的比較。因此，電子商務消除了零售商的庫存水平，並反映了對品牌的真正需求。

Also, important to call that the Muck and XTRATUF e-commerce websites didn't have the full catalog of inventory last year. So we did benefit a little bit from that as we are working through the distribution challenges last year. But really, across all brands, we saw strong growth in our e-commerce business.

此外，重要的是 Muck 和 XTRATUF 電子商務網站去年沒有完整的庫存目錄。因此，在我們去年應對分銷挑戰時，我們確實從中受益匪淺。但實際上，在所有品牌中，我們都看到了電子商務業務的強勁增長。

Okay. That's really helpful color. And then maybe a follow-up, as you think about 2023, if I exclude the military business from the base here, it looks like you're projecting all other revenue down mid- to high single digits for the year. So could you maybe just elaborate a little bit more what you're embedding? I assume that's really a decline in the wholesale business. So if you could shape the year a little better for us and then comment on what visibility you have, if you have any, for the second half.

好的。那是非常有用的顏色。然後可能是後續行動，正如你對 2023 年的看法，如果我從這裡的基地中排除軍事業務，看起來你將今年所有其他收入預測為中高個位數。那麼，您能否再詳細說明一下您要嵌入的內容？我認為這確實是批發業務的下滑。因此，如果你能為我們更好地塑造這一年，然後評論你對下半年的知名度（如果有的話）。

I'll start with that one, Jon, and then Jason can chime in. And so as we look at next year, we anticipate continuing to grow in that retail category. We think Lehigh and the e-com business will carry momentum into 2023. And I would say that we would peg that growth in the retail category kind of around that high single-digit, low double-digit kind of growth area and then seeing small mid-single-digit declines in the wholesale channel or segment in 2023.

我將從那個開始，Jon，然後 Jason 可以插話。因此，當我們展望明年時，我們預計該零售類別將繼續增長。我們認為 Lehigh 和電子商務業務將在 2023 年保持勢頭。我想說的是，我們會將零售類別的增長與高個位數、低兩位數的增長區域掛鉤，然後看到小幅增長2023 年批發渠道或細分市場的中等個位數下降。

As it works for timing between quarters, right, if you think about the first half of 2022, we were opening up that Reno facility. So we did a lot of catching up in the first half of 2022, and so we got the retailers and their inventory a little bit behind schedule. And so for 2023, again, we anticipate that the business would kind of fall back into our traditional seasonality a little bit. It might be a little bit exacerbated by the tough comparison in the first half of last year. But think of that 42% to 44% of sales in the first half of the year and the 56% to 58% sales in the second half.

因為它適用於季度之間的時間安排，所以，如果你想想 2022 年上半年，我們將開放里諾工廠。所以我們在 2022 年上半年做了很多追趕，因此我們讓零售商和他們的庫存有點落後於計劃。因此，對於 2023 年，我們再次預計該業務將有點回到我們傳統的季節性。去年上半年的艱難比較可能會加劇這種情況。但想想上半年銷售額的 42% 到 44% 和下半年銷售額的 56% 到 58%。

Got it. Understood. And then just maybe 2 last margin questions probably here, first, just on pricing. I know this year, you priced to offset some of the freight costs. So as the freight goes away and there's still a lot of inventory in the channel, is there any risk of a more promotional environment or even giving some of the pricing back? And then just to clarify, Tom, for the operating expenses or SG&A for the year, did you say dollars would be about the same year-over-year? I just want to clarify that.

知道了。明白了。然後可能只有 2 個最後的保證金問題，首先，只是關於定價。我知道今年，你們的定價是為了抵消部分運費。因此，隨著運費的減少，渠道中仍有大量庫存，是否存在更多促銷環境甚至退還部分定價的風險？然後澄清一下，湯姆，對於當年的運營費用或 SG&A，你是說美元與去年同期大致相同嗎？我只想澄清一下。

Yes. So on the operating expenses, yes, we think dollars will be relatively flat year-over-year, so some modest deleverage. The contract manufacturing sales carry little to no operating expenses, so we'll delever from that standpoint. And as it relates to -- what was the first part of the question, John? I want to make sure I got it.

是的。因此，在運營費用方面，是的，我們認為美元同比將相對持平，因此會適度去槓桿化。合同製造銷售幾乎沒有運營費用，因此我們將從這個角度去槓桿化。約翰，問題的第一部分是什麼？我想確保我明白了。

Just on promotional and any risk of giving some of it back.

只是為了促銷和任何退還一部分的風險。

So I don't foresee that happening. I think, as the container prices have changed, we had not taken a lot of price increases before. So we think that where we're at here is probably a place that we're going to see stick. I think we will not see a lot of promotion in our brands. I mean, look, if we have obsolete inventory, we'll work through that and get out of it. But we still look at our product and say it's functional tool-type products, and the guy or gal is going to buy it when they need it. And so we're going to keep the prices really where they're at. But I think in 2023, in particular, we won't see any of that or very little.

所以我沒有預見到會發生這種情況。我認為，隨著集裝箱價格的變化，我們之前並沒有大幅提價。因此，我們認為我們所處的位置可能是我們將看到的地方。我認為我們不會在我們的品牌中看到很多促銷活動。我的意思是，看，如果我們有過時的庫存，我們會解決它並擺脫它。但我們仍然看我們的產品，說它是功能性工具類產品，男人或女孩會在需要時購買。因此，我們將把價格保持在原來的水平。但我認為，特別是在 2023 年，我們不會看到任何這種情況，或者很少見。

Yes, just to add on, too. We've been able to demonstrate that we can lower our inventory levels without getting promotional, and so I anticipate that trend to continue in 2023. I think the idea of us getting promotional would probably only happen to the thin shelf space with our retailers. And so we monitor that with our peers, and we'll continue to do so in 2023 and act appropriately.

是的，只是為了補充。我們已經能夠證明我們可以在不進行促銷的情況下降低庫存水平，因此我預計這種趨勢將在 2023 年繼續。我認為我們進行促銷的想法可能只會發生在我們零售商的薄貨架空間上。因此，我們與同行一起監督這一點，我們將在 2023 年繼續這樣做並採取適當的行動。

There are no further questions at this time. I would now like to turn the floor back over to Mr. Brooks for closing comments.

目前沒有其他問題。我現在想把發言權轉回給布魯克斯先生，請他發表結束評論。

Thank you very much. I just want to say thanks to the people on the call and all our investors, and I once again would like to say thanks to the Rocky team. They worked really hard during a challenging year in 2022, and we were able to make it happen, and I really look forward to seeing what we can do in the future. So thank you, Rocky team.

非常感謝。我只想感謝電話會議的人員和我們所有的投資者，我想再次感謝 Rocky 團隊。在充滿挑戰的 2022 年，他們工作非常努力，我們得以實現，我真的很期待看到我們在未來能做些什麼。所以謝謝你，Rocky 團隊。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。