Rocky Brands (RCKY) Q1 2026 Earnings Transcript

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Date

Tuesday, April 28, 2026 at 4:30 p.m. ET

Call participants

• Chief Executive Officer — Jason Brooks
• Chief Operating and Chief Financial Officer — Thomas Robertson

Takeaways

• Net Sales -- $124.4 million, up 9.1% year over year, driven by strong momentum in legacy and new product lines across major brands.
• Wholesale Sales -- $78.4 million, an increase of 4.8%, or $3.6 million, mainly benefitting from improved channel trends and expanded distribution.
• Retail Sales -- $42.7 million, up 16.5%, reflecting strong DTC channel growth, new product introductions, and broad-based brand traction.
• Contract Manufacturing Sales -- $3.3 million; management provided no explicit year-over-year comparison for this segment.
• Gross Profit -- $45.4 million, representing 36.5% of net sales compared to 41.2% last year, with the 470 basis point decline attributable primarily to over $7 million of higher tariffs and some increase in sales of discontinued styles.
• Gross Margins by Segment -- Wholesale: 34.4% (down from 40.3%); Retail: 42.6% (down from 45.7%); Contract Manufacturing: 9.2% (up from 5.8%).
• Operating Expenses -- $41.8 million, or 33.6% of net sales, up from $38.3 million year over year, primarily due to higher logistics costs tied to retail growth.
• Adjusted Operating Expenses -- $41.1 million for the quarter, up from $37.6 million, with adjusted operating expenses flat at 33% of net sales for both years.
• Income from Operations -- $3.6 million (2.9% of net sales), down from $8.7 million (7.6% of net sales); adjusted operating income at $4.3 million (3.5% margin) versus $9.4 million (8.2% margin).
• Interest Expense -- $2.1 million, down from $2.4 million, reflecting lower debt levels.
• Net Income -- $1.3 million, or $0.17 per diluted share (GAAP), compared to $4.9 million, or $0.66 per diluted share, last year.
• Adjusted Net Income -- $1.8 million, or $0.24 per diluted share, versus $5.5 million, or $0.73 per diluted share, in the prior year.
• Debt -- $122.2 million at quarter end, down 5% since March.
• Cash and Cash Equivalents -- $1.7 million reported on the balance sheet at quarter end.
• Inventories -- $172.6 million at quarter end, a 1.6% decrease from last year and a 4.7% decrease from the end of 2025.
• Tariffs Impact -- Over $7 million headwind in the quarter, primarily responsible for the margin compression seen in Q1.
• 2026 Guidance -- Management reiterated full-year outlook: revenue growth of approximately 6%, retail segment to outpace wholesale; expects gross margins slightly lower than 2025’s 40.9%, with about $10 million in tariff headwinds concentrated 70% in Q1 and 30% in Q2; EPS growth forecast in the low-teen range.
• Q2 Outlook -- Gross margins expected to improve from Q1 but not as much as initially forecast due to $1 million of tariffs shifting from Q1 into Q2; Q2 EPS anticipated to be about $0.20 lower than prior year’s Q2.
• Tariff Refund Process -- Management has initiated a $20.5 million tariff refund request via the ACE portal, with timing and receipt of payment still uncertain; no refunds assumed in current guidance.
• Brand Performance -- XTRATUF and Muck delivered high-teen percentage growth, Durango posted single-digit growth, and Georgia Boot experienced a slight single-digit sales decline due to order timing, with digital channels up double digits.
• Sell-Through and Prebooks -- Management reported strong sell-through at retail in Q4 and Q1, with robust order books and prebookings across brands for the remainder of the year.
• Inventory Management -- Executives stated the company successfully maintained strong inventory availability, enabling sales capture during peak weather-driven periods and regaining shelf space in key categories.
• Product and Channel Trends -- New product launches, especially with BOA-equipped and branded safety-toe boots, are highlighted as market share drivers within industry safety and farm/ranch segments.
• Commercial Military Segment -- Recorded low single-digit growth, with commercial military leading high single-digit growth and notable gains with Army and Air Force Exchange Services and Navy Exchange.

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Risks

• Higher tariffs accounted for a reduction of over 470 basis points in gross margin, producing a significant drop in operating profits and earnings per share for the quarter.
• Management anticipates a less meaningful improvement in Q2 profitability than previously expected due to additional tariff expenses shifting into the period; Q2 EPS is projected to decline by approximately $0.20 year over year.
• Freight fuel surcharges increased toward the end of Q1 and into April, contributing to higher logistics costs and ongoing cost pressures.
• Uncertainty persists regarding the timing and receipt of tariff refunds, and current guidance incorporates no benefit from the $20.5 million refund request in process.
• No new U.S. government contracts have been secured in the commercial military segment, which was specifically cited as an area lacking growth momentum.

Summary

Rocky Brands (NASDAQ:RCKY) reported $124.4 million in net sales and 9.1% growth, driven by strong DTC gains and product innovation, but faced compressed gross margins due to over $7 million in tariff costs and costlier logistic operations from increased freight fuel surcharges. Management reaffirmed 2026 guidance for 6% annual revenue growth and low-teen EPS expansion, though noted that Q2 EPS is now forecast to fall by $0.20 versus the prior year given additional tariff-related expense timing. Order books and prebookings remain “very strong”—a direct quote from management—across all brands with particular strength in rubber and safety-toe work products, buoyed by regained shelf space and expanded distribution following targeted inventory investments. The company has begun the process to claim $20.5 million in tariff refunds but stated that “The guidance that we provided assumes no refunds are captured, so that would be all upside.” Inventory levels were actively reduced, and management highlighted favorable trends in subsidy utilization within its B2B Lehigh segment.

• Management reported that higher tariffs and “higher freight fuel surcharges at the end of the first quarter, and that has continued into the first month of the second quarter,” were the principal drivers of expense increases.
• Wholesale and retail segment gross margins fell materially, with retail segment gross margin down to 42.6% from 45.7% and wholesale to 34.4% from 40.3%, although contract manufacturing margins improved.
• Adjusted operating expenses as a percent of sales were maintained at 33%, even as total dollar spend rose alongside higher retail volume.
• Management identified “a big change in behavior from any of our consumers,” signaling stability in demand but ongoing cost vigilance due to commodity inputs and tariffs.
• Company representatives confirmed ongoing optimism for the second half of the year, citing a “clear line of sight to returning gross margins to the 40% range and delivering meaningful earnings growth in the second half of the year.”

Industry glossary

• DTC: Direct-to-Consumer; product sales made directly from the company to end consumers, often via e-commerce platforms.
• BOA: Proprietary closure system technology that allows quick, precision fit adjustments, frequently utilized in specialty footwear.
• At-once orders: Wholesale orders placed for immediate fulfillment and shipment, versus prebookings for future delivery.
• Section 301 tariffs: U.S. tariffs imposed on imports from certain countries following Section 301 of the Trade Act of 1974 due to unfair trade practices.
• AIPA: Acronym for American Importers and Producers Association Tariff program, cited in context as a recent tariff impact affecting earnings power.
• S2V: Rocky Brands’ proprietary military/combat boot collection referenced as a growth driver within military and government segments.
• ACE portal: U.S. Customs' Automated Commercial Environment, the federal system for filing customs compliance data and refund claims, including tariff refunds.
• Sell-in / Sell-through: “Sell-in” refers to shipments to retailers; “sell-through” refers to actual retail sales to end customers.

Full Conference Call Transcript

Jason Brooks: Thank you, Brendon. With me on today's call is Thomas Robertson, our Chief Operating and Chief Financial Officer. After our prepared remarks, we will take your questions. We are pleased to report a solid start to 2026, and we sustained the strong sales momentum we experienced in the back half of last year. Q1 sales increased 9% following the 9% increase we achieved in 2025. Our performance was driven by legacy styles and compelling new product introductions in key categories that fueled robust DTC growth and improving wholesale trends. The extended winter weather across much of the Eastern United States provided a favorable backdrop for our cold-weather offerings while our spring collections gained traction as the quarter progressed.

What is particularly encouraging is the quality of our growth. We are seeing consistent full-price selling with key brick-and-mortar accounts as well as digital partners and especially on our own branded websites. Our strategic focus on expanding distribution, introducing compelling new products at key price points, and leveraging technology platforms like the BOA continues to resonate with our retailers and our consumers. Thomas will go through the financials in detail shortly, but from a profit standpoint, Q1 was in line with our expectations. The year-over-year change in gross and operating margins was driven primarily by higher tariffs, which was expected and included in our outlook for this year.

The good news is that the headwind from higher tariffs starts to lessen in the second quarter, which along with our current top-line momentum gives us a clear line of sight to returning gross margins to the 40% range and delivering meaningful earnings growth in the second half of the year. Let me walk you through our first quarter brand performances. XTRATUF started 2026 with exceptional momentum, delivering high-teen growth over last year as all channels contributed to the brand's strong performance. U.S. wholesale was up low double digits, while our e-commerce business continued its impressive trajectory from Q4, posting substantial growth. Marketplace sales also gained momentum throughout the quarter.

Our product mix reflected both the strength of our core offerings and successful new introductions. The 15-inch Legacy Boot, our Ankle Deck Boot, and the Ankle Deck Boot Sport in key colors like Duck Camo and Olive remained top sellers. We are particularly pleased with the reception of our Spring 2026 line, which was highlighted by the Brown ADB Sport, the men's Black Deep Storm ADB, and our highly anticipated Kids' Tusk Cruisers collection. Distribution gains were broad-based across big-box sporting goods retailers, outdoor-focused key accounts, specialty lifestyle independents, and Western-focused partners. Our well-established marine channel also delivered solid results to start the year. This diverse channel strength, combined with compelling product innovation, positions XTRATUF for continued success through 2026.

Muck delivered its best first quarter in over three years, posting high-teen growth versus last year. This outstanding performance reflected strength across all channels—wholesale, e-commerce, marketplace, and international—as the brand capitalized on favorable weather conditions and strong product availability. Extended winter weather across most of the United States drove exceptional demand for our Arctic collections, which became the biggest contributor to the brand's growth in both men's and women's collections. Our marketing team effectively leveraged social media and digital advertising to capitalize on these favorable weather patterns through February and early March. Equally important was our focus on maintaining strong inventory positions on our core Chore and Chore Steel styles, which continue to perform well across multiple channels.

A major highlight was early delivery and reception of our new Rainscape Spring collection, which contributed meaningfully to the brand's growth in the quarter. From a channel perspective, our hardware business grew significantly, driven by continued partnership expansions with a national hardware retailer. Also of note, the sporting goods channel showed meaningful improvements after several challenging quarters as Muck regained shelf space from competitors for our legacy Arctic styles. Durango delivered a solid start to the year with single-digit growth driven by consistent key-account momentum throughout the quarter. We saw particularly strong performance in Texas, where the Hispanic market segment showed meaningful improvement over last year with double-digit increases.

Florida and Georgia also posted strong double-digit gains, fueled by demand for our Rebel, Rebel Work, and our new Shiloh collection. A highlight in our key account business was exceptional growth with a major Western retailer, increasing over 30% for the quarter. This was driven by exclusive styles and successful expansion into new categories, including the Shiloh and our women's Crush fashion series. The March delivery of exciting spring products, including category extensions in the Shiloh, Crush updates, and our new Workhorse work collection, provided additional momentum heading into the second quarter. Georgia Boot faced a challenging January but rebounded in February and March, both of which exceeded prior-year sales.

While the quarter finished with a slight single-digit decline versus last year, this was primarily timing-driven as several meaningful wholesale orders booked in late March carried into April, positioning us well for the current quarter. Adding to our optimism for Georgia is the continued strength of the brand's digital channels, as both e-commerce and marketplace were up healthy double digits in Q1, and that momentum has carried into the early part of Q2. Product innovation continues to drive Georgia Boot's success. Our Carbon Fiber—our Carbon Flex Wedge—collection remains one of the brand's most successful launches, performing exceptionally well across both field and key accounts.

Notably, the BOA-equipped version has quickly become a top-performing item in the overall line, and we will continue to expand the BOA technology across future assortments. Additionally, our new Core 37 farm-and-ranch assortment was among the top-performing introductions for Fall 2026 and began shipping this quarter, delivering strong value at a key price point across multiple categories. Rocky work, outdoor, and western started 2026 with a positive result as wholesale sales continued strengthening through greater in-line product sales versus last year's off-price focus. The outdoor segment's growth was highlighted by increased programs with key Upper Midwest retailers and a prominent Midwest online retailer who began featuring Rocky again after several years.

We also saw solid sales with independent retailers carrying our deep line of insulated and waterproof footwear. New spring deliveries and replenishment orders for our new Western collection were pivotal in reviving a category that had been challenged in recent periods. Our new Ride LTE series of Western work boots, introduced late in Q4, has been a hit with retailers. We are already receiving significant replenishment orders from partners who brought the product in before the end of the year. In work, we continue to gain strength with key industry footwear suppliers across Texas and the Northeast, along with prominent mid-tier footwear retailers. Technology leadership remains a key differentiator.

Our premium Rams Horn boot composition-toe product showed mid-teen growth and has quickly become one of the leading boots in the industry safety-toe market. Commercial military and public service delivered a solid start to 2026, posting low single-digit growth over the prior period. This performance represents continued positive momentum from our strong Q4 2025 finish and marks a significant improvement in trajectory compared to the beginning of last year. The commercial military segment led the way with high single-digit growth, driven by exceptional performance with Army and Air Force Exchange Services, which posted strong double-digit increases. The Navy Exchange also had a phenomenal quarter with significant growth fueled by our S2V steel-toe boots.

Our S2V collection continues to be a growth driver for the division, with the Predator S2V and related styles performing exceptionally well across both field and key accounts. Turning to our B2B Lehigh business, it continued its strong momentum from Q4, growing high single digits versus the first quarter of last year. This performance was driven by continued success in new customer acquisition, a direct result of strategic structural changes we have made to our sales force. We are also seeing positive trends in subsidy utilization and average subsidy dollars as companies work to provide consistent product assortments for their employees despite rising costs.

While we are monitoring potential impacts from tariff uncertainty and fuel costs later in the year, the effect on Q1 was minimal and the overall health of the business remains very strong. Finally, our partnership with Vole Eyewear continues to strengthen and deliver results, with accounts that committed in Q4 2025 now onboarding and resetting their subsidies for 2026. The response to this prescription safety eyewear program remains very positive and is generating meaningful incremental sales as an extension of our managed PPE programs. To reiterate, we are pleased with our first quarter performance, and we are encouraged by the sell-in and sell-out trends we are seeing across the brand portfolio.

We look forward to getting past these tough tariff comparisons so our bottom-line results better reflect the strength of our business and the benefits of our operating model. With that, I will turn it over to Thomas to review the financials.

Thomas Robertson: Thank you. Echoing Jason's sentiment, I am very pleased with the start of 2026. The momentum we experienced in our business last year carried over into the new year, driving strong top-line growth despite the challenging tariff environment we anticipated. Reported net sales for the first quarter increased 9.1% year over year to $124.4 million, which was in line with our expectations. By segment, wholesale sales increased $3.6 million, or 4.8%, to $78.4 million. Retail sales increased 16.5% to $42.7 million, and contract manufacturing sales were $3.3 million. Turning to gross profit, for the first quarter gross profit was $45.4 million, or 36.5% of sales, compared to $47 million, or 41.2% of sales, in the same period last year.

The 470 basis point decrease was driven by a little over $7 million in higher tariffs compared with the year-ago period, and to a much lesser extent, an increase in sales of discontinued styles. This was partly offset by strong full-price selling, favorable channel mix with higher retail sales, and the benefit of price increases implemented in 2025. Reported gross margins by segment were as follows: wholesale margins were 34.4% versus 40.3%, with the change driven by the significant impact of tariffs; retail margins were 42.6% versus 45.7%, also reflecting higher tariffs compared with a year ago; and contract manufacturing margins improved to 9.2% from 5.8%.

Operating expenses were $41.8 million, or 33.6% of net sales in 2026, compared to $38.3 million, or 33.6% of net sales, last year. Excluding the $700 thousand of acquisition-related amortization in the first quarter of this year and last year, adjusted operating expenses were $41.1 million and $37.6 million, respectively, in 2026 and 2025. As a percentage of net sales, adjusted operating expenses were 33% in both periods. The increase in operating expenses was driven primarily by higher logistics costs associated with the increase in retail sales. Income from operations was $3.6 million, or 2.9% of net sales, compared to $8.7 million, or 7.6% of net sales, in the year-ago period.

Adjusted operating income was $4.3 million, or 3.5% of net sales, compared to adjusted operating income of $9.4 million, or 8.2% of net sales, a year ago, reflecting the impact of higher tariffs in 2026. For the first quarter of this year, interest expense was $2.1 million compared with $2.4 million in the year-ago period. This decrease reflects lower debt levels. On a GAAP basis, we reported net income of $1.3 million, or $0.17 per diluted share, compared to net income of $4.9 million, or $0.66 per diluted share, in 2025. Adjusted net income for 2026 was $1.8 million, or $0.24 per diluted share, compared to adjusted net income of $5.5 million, or $0.73 per diluted share, a year ago.

Turning to our balance sheet, at the end of the first quarter cash and cash equivalents stood at $1.7 million, and our debt, net of unamortized debt issuance costs, totaled $122.2 million, a decrease of 5% since March. Inventories at the end of the first quarter were $172.6 million, down 1.6% compared to $175.5 million a year ago and down 4.7% compared to $181.1 million at the end of 2025. We are pleased with our inventory management as we successfully navigated the tariff environment while maintaining appropriate stock levels to support our growth. With respect to our outlook, based on our first quarter performance, we are reiterating our full-year 2026 guidance provided on our fourth quarter call.

For 2026, we continue to expect revenue to increase approximately 6% over 2025, with our retail segment growing faster than wholesale. While we are still forecasting gross margins to be down modestly from the 40.9% we reported in 2025, this includes roughly $10 million in higher tariffs that will hit our P&L in the first half of the year, split roughly 70/30 between Q1 and Q2 versus our prior view of 80/20. SG&A is expected to be up in dollars as we support growth. However, as a percentage of revenue, we expect to leverage by approximately 80 basis points. Interest expense will take another step down this year based on year-end debt levels.

The decrease will be more modest than what we realized in 2025. This translates into EPS growth in the low-teen range. For modeling purposes, we still expect Q2 gross margins to improve from Q1 levels, but to a lesser degree than initially thought as approximately $1 million more in higher tariffs shifted into Q2 due to the timing of certain product sales. Therefore, while we are still forecasting the year-over-year decline in profitability to lessen in Q2 versus Q1, the improvement will not be as meaningful as we anticipated at the start of the year. Due to this shift, we now expect Q2 EPS to be down somewhere in the neighborhood of $0.20 versus Q2 last year.

We look forward to having the current tariff headwinds largely behind us as we exit Q2, which will drive gross margins back above 40% and allow us to translate our top-line momentum into strong earnings growth for the second half of the year. That concludes our prepared remarks. Operator, we are now ready for questions.

Operator: We will now open the call for questions. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Brendon Frey: Thank you.

Operator: Our first question comes from the line of Jonathan Komp with Baird. Please proceed.

Jonathan Komp: Yes, hi. Good afternoon. I want to start by asking what you are observing in the environment—if you have seen any major shifts across your brands or your major partners, given some of the uncertainty in the environment—just overall sense of health of the consumer demand and the orders that you are seeing?

Jason Brooks: Hey, Jonathan. Thanks. I would tell you that we feel pretty positive. As I talked about the brands, XTRATUF is still seeing really nice momentum. We have seen Muck make a little bit of a turn here, and Rocky and Durango as well. So I think we are feeling pretty positive about it. The hardware business has been pretty positive. As we talked about, the Western business seems to be going pretty well for us. The one area that we still are not seeing a huge uptick is in commercial military, where we have not seen any contracts from our U.S. government, but that is something that we will continue to focus on and work.

I do not know if you had anything to add, Thomas.

Thomas Robertson: I would tell you throughout the first quarter and even in April, we saw general at-once trends being up compared to last year. Looking out into the future, our order book looks very strong for the rest of the year. We have not seen a big change in behavior from any of our consumers. One of the things we are trying to dissect a little bit is, with the success of particularly the Muck brand in Q4 and in Q1 of this year, the order book is very strong, and we believe that retailers are going to be stocking back up on inventory that they sold through over the last six months.

Jonathan Komp: Maybe to follow up, more related to the cost environment—can you talk about any surcharges you are seeing come through, or how you think about freight and, down the road, product costs—higher costs that you might see?

Thomas Robertson: Certainly. We definitely experienced higher freight fuel surcharges at the end of the first quarter, and that has continued into the first month of the second quarter. It is something we are monitoring closely. That also drove a little bit of the increase in our logistics costs that we called out in the prepared remarks. The thing that we are really trying to keep our eye on, quite frankly, is that there are a lot of oil-based products in the outsoles of our shoes and in some of the rubber compounds that go into our rubber boot products. We are keeping a close eye on that.

We have seen some slight price increases and are being warned of larger ones if this does not settle in here or get resolved relatively soon. We are keeping a very close eye on that.

Jonathan Komp: And then when you look at the back half, could you maybe just walk through some of the pieces that are giving you confidence in, I think you said, pretty healthy or strong earnings growth year over year in the back half?

Thomas Robertson: The thing that is giving us the most confidence is the order book. We are really up in future orders across all brands, and certain brands—particularly our rubber products—are standing out with Muck and XTRATUF. We are seeing strong orders for Q3 and Q4. We are trying to decipher if that means that retailers are going to be doing more ordering and less at-once, and it is allowing us to make the best decisions to get inventory here for the last half of the year.

Jonathan Komp: Maybe just last one—tariffs for the year. What is your current thinking around the impact from the rates that you are paying today, and anything you might share on the refund front as well? Thank you.

Thomas Robertson: Starting with the refund, the ACE portal opened up on the 20th about a week or so ago, so we have started that refund process, requesting our refunds. The guidance that we provided assumes no refunds are captured, so that would be all upside. The total request that we are seeking is about $20.5 million. TBD on when that gets paid, and we will continue to work through the process of getting all of our refunds submitted. The system is not working perfectly for us, but we have heard that from a lot of peers. In the guidance that we have given, we have forecasted the future tariff impact of these 122s at this 10%.

We are waiting to see what happens with the Section 301 investigations later this summer, and we will update guidance as we have more clarity on what the future of tariffs looks like. Hopefully, we are able to capture these refunds in Q2 or Q3.

Jonathan Komp: Okay. Thanks again for all the color.

Thomas Robertson: Thanks, Jonathan.

Operator: Our next question comes from the line of Janine Stichter with BTIG. Please proceed.

Janine Hoffman Stichter: Hi, congratulations on the momentum. I wanted to ask a bit more about the sell-in and sell-through trends you are seeing. I think you mentioned that you are really pleased with both the sell-in and the sell-through. Can you help us understand where those fit? Are you currently at a point where, broadly across all brands, the sell-through is outpacing the sell-in, and would you expect that to catch up as the year progresses? Just want to understand what you are seeing from both sell-in and sell-through perspectives.

Jason Brooks: Thank you, Janine. If we look back into Q4, we had tremendous success—9% growth in Q4 from 2024 to 2025—and we saw that sell-through at retail. That has allowed the retailer to continue to fill in not only at-once, which we continued to see in Q1, but it also has allowed them to feel more comfortable in their bookings for Q3 and Q4. Our products typically are a little bit more heavily weighted to waterproof and insulated product. XTRATUF is a little unique in that it is still a good fall product, but we are seeing pretty good bookings from them in Q2, Q3, and Q4 as well.

So we are feeling comfortable as the at-once business continues to happen, and then we are seeing the prebooks for fall—not all the brands at the same level—but we are seeing pretty good trends across all the brands as we move into the third and fourth quarter.

Thomas Robertson: Just to add on there, Jason had it in his prepared remarks, but it is really important to call out that we had the inventory to execute and capture sales when weather came in Q4 and Q1. The investment in inventory is paying dividends. Particularly with the Muck brand, we believe we have gained shelf space back, and that is exciting to hear, given that four years ago when we acquired the brands, we lost a little bit. We think we have gained a lot of that back, and our numbers would prove that out. The other thing I am most excited about—and it is really across all brands—is our new product for 2026 and Fall 2026.

It is arguably the best booking season we have ever had. We are excited to see how this plays out at retail. We have not seen it check through retail yet—we are starting to see it on the spring product—but we will continue to monitor that, and that is probably the thing I am most positive about.

Janine Hoffman Stichter: Great, that is helpful. Then you mentioned that the Hispanic consumer had improved—I think you called out Texas. Can you unpack that a little bit more—what has been going on there?

Jason Brooks: There were some areas in 2025 where that market slowed a little bit, particularly in Western areas. We have seen that some of those retail partners are seeing better sell-through in that area, particularly the Hispanic market, so just seeing better sell-through in those retail stores.

Janine Hoffman Stichter: Super helpful. Thank you. I will pass it on.

Jason Brooks: Thank you.

Operator: Thank you. As a reminder, it is star-1 to ask a question. Our next question comes from the line of Bruce Geller with Geller Ventures. Please proceed.

Bruce Geller: Hi, good afternoon, gentlemen. I am trying to get a better sense of the overall tariff impact. It seems based on what you said today that it cost you in the first quarter roughly $0.70 a share on an after-tax basis. So ex the tariffs, you would have earned close to $1 a share. Is that a fair statement? And so if you get this $20 million refund, that is over $2 a share after tax.

Is it fair to say that the earnings power of the company is approximately $2 per share higher than you have earned in the last 12 months because of these tariffs, or is that offset somewhat by the new tariffs that have been put on?

Thomas Robertson: I think that is a fair statement. In 2025, we had just over $10 million of tariff impact, and then the $10 million we are calling out for 2026. If it was a rolling 12 months, I think that is the math you are doing there, and yes, that math works. There are other variables in there that complicate things. We recognize that we have the 10% tariffs in place right now that we know are already being challenged in court, and then we know the Section 301s are coming at us, so we are monitoring that closely.

Last I have read, the goal of the 301s was to get the 301 tariffs back to where those reciprocal rates were pre–Supreme Court ruling. We will continue to monitor that closely.

Bruce Geller: But with the tariffs that are in place right now—just the 10%, excluding the potential for the 301s—how much of a year-over-year, or how much of a hit on a 12-month basis, would you say that the tariffs that have now been eliminated cost you? Again, I am trying to get a sense of the earnings power, because in the last 12 months you reported roughly $2.50 a share in earnings, but it sounds to me like the earnings power could be $2 more than that, and that is on a base that now seems to be growing on a nice trajectory.

Thomas Robertson: I think your logic is correct, and maybe this will help articulate it. If we were to take out the AIPA impact in 2026, we would have shown a slight margin improvement over 2025 results. We took pricing when the tariffs came out, and the pricing we took was based on the tariffs at the time and planned mitigation strategies, which we have been working through.

If we look at the current broad landscape today, we would see some slight improvements, partially driven by all of these sourcing changes that the team has made, including making more of our products in the Dominican Republic, which has had a more favorable tariff rate up until the Supreme Court ruling, but we anticipate hopefully that recovering—getting back to normal—in the future.

Bruce Geller: Thanks. And just one other question: I know you do not really like to talk about specific customers, but I personally have noticed I have been getting a lot of digital ads lately from Boot Barn regarding the XTRATUF brand. To my knowledge, historically you had not sold XTRATUF at Boot Barn. So I am just curious if this is something that has recently come to fruition, and if so, is it just online, or are these boots now going into the stores as well? Because that seems to me like it could be pretty material if that is accurate.

Jason Brooks: In the prepared remarks, I talked a little bit about the Western retail category for XTRATUF. There has been a little bit of expansion into that area. It is slow right now in that area, but we do see a really positive potential opportunity there, and maybe more than just the retailer that you talked about. There is definitely a little bit of opportunity there.

Bruce Geller: Great. Thank you very much, gentlemen.

Jason Brooks: Thanks, Bruce.

Operator: Thank you. There are no further questions at this time. I would like to pass the call back over to management for any closing remarks.

Jason Brooks: Great. Thank you very much. First, I would like to thank the entire Rocky Brands, Inc. team and the efforts that they have put in here in Q1, helping Rocky Brands, Inc. be the best company it can be. I would also like to thank our board of directors and our shareholders for their support, and we look forward to our continued success in 2026. Thank you all very much for your time today.

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

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