RCKY - Earnings call transcript Q3 2021

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Rocky Brands' Third Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. the over turn of Brendon now ICR. I'll conference to call Frey And

Brendon Frey

thanks us everyone you, to Thank and joining today.

materially. the results statements Before changes, which we Q&A defined Act forward-looking the assumptions Such information to statements at session, today's to obligation to Litigation are cause We statements. by of may as based XXXX. begin, please subject assume period this uncertainties, note may time risks that are Private differ and Reform Securities no actual and on such including available contain and update

a I'll uncertainties, XX-K and our discussion today's turn to over now Brands. and For Chief our complete refer release including XXXX. of Commission, for the the Officer conference the Securities and press of Brooks, the Rocky Exchange please Jason risk year reports ended Executive with filed XX, to December

Jason Brooks

on footwear portfolio inventory, me Officer. of is With to we the to walk the inbound our for all Like Brendon. ample strong brands year, third to in to from which brand a in in the lifestyle performance DC demand with a during fulfill quarter. orders details market unforeseen environment. quarter, two before I'll issues situation, of we drive there the and for going After in enhanced coincided completed Tom experienced organizations and despite after encountered we performance, we the we and on and I'm through be business impacted Robertson, record was the Financial review Honeywell's provide acquisition we knew of the to Ohio ability finish during we of you, today's the demand on to color temporarily expand will that, Group's heavy our and the steps for center give returning taken supply completed the first-half improve update leverage When distribution our a state XXXX. integrating preparation our our and outlook the time. to deliveries numbers and mid-August, inventory Then idea lifting true was very share Boston a of issues will our to provide strength have in demand timeline businesses the Chief channel the and which could the strong our soon on an Honeywell's better call Thank leading March, steady in year, Tom profitability. we've combined the a for that done

move after Ohio inventory the the we in obstacles record schedule, number a orders DC. brands completed acquire on into of soon as of started While we we ran processing

the getting market, require to number the the which led labor our nearly center. to strong of and over Due the Honeywell to quarter But with For to Boston our of shifts and up XXX% was inefficiencies at of time, the orders not systems context, direct DC. systems, inventory work out in last due The it was staff more to DC onboard to we year-over-year. congestion our align Group of and expected the Knowing order XX% at longer product the systems workers keep increased and differences new tight with in demand. train hired made distribution inventory it we would it process. over in a distribution took fulfillment our more the map amount difficult XXXX Integrating the our and in shipped than received same third versus QX year. at we product fulfillment both up with of additional the

third currently capacity, double in on at Helping in have fully Reno past with Reno, temporary to we XX-days a Similar X. integration. place were fully DC year. going This our square combined and space, went the improving house Nevada a to the new the and next will We positives to nearly not are to there these Group are discuss operating While I'm and us, the were our Despite from the the steady organization much the the live before over October DC footwear. of approximately alleviate issues impact million made challenges, we some XXX,XXX of behind progress the expect first-half to pressure earnings during better give Boston DC running quarter. the of a a X.X of call, up pairs be fulfillment number last in separately. ability Ohio the and of us feet the

year. addition sales quarter which performance, group, on our strength color of much also a through orders Starting and the to going I'm will sell third were with results, underlying to of Ohio period idea In the same last provide orders everyone versus business. up better the our for XX% give some approximately

posted which more Several performance and year-over-year. categories, X%, The become from sell brand true through contributed grew wholesale to Beginning our strong meaningful business as wholesale, as driven and Ohio has recent continues help western an additional XXXX. throughout at fulfillment. the strong year-over-year, across our segments. is and impact farm delayed in strong high. more western retail by our for traditional both double of driven XX% in remains key digit shelf increased reflecting space sales to all-time retail customers western Durango's brand demand the The secure ranch However, with been Durango and and group each demand performance, growth

western many getting into in With the swing, rodeo boot of sales. to recently starting nice weather and seeing turn pickup colder our a accounts are season full

the majority chain navigating global continue are Durango's better quarter, we that disruptions hear supply than we While other to potential current logistics much of growth limited situation peers. and the our in the

we probably able several stores, breaking at These fall accounts. hunting, Georgia to to season products were procure brands traditional of point. growth in key product of the including fall many brands chain highlight notable boot, The demand boots, large addition experienced a introduction pro disruption of carrying LT space more new inventory quarter, of businesses, provided products recent continue the brands price to been in styles growth record and and Turning Based of AMP and challenges western supply on customers the farm being Thankfully, the outdoor hampered spans performance, LT with the our bestsellers, distribution popular on shelf has deliver had and this booking we'll impact the the new biggest The and which ranch Rocky to by at work utility for broadening the Stalker commercial entry positive contributed for the some sport biggest ratings, difficult new of the by work outdoor Mountain Work, introduction wins during and confident very of strengthening as styles brand for a the product. headwinds. and The the especially driven brand. into season, had has Pro a accessible were women's consumer season technical a premium comfort-based military sport be we of new on great platform. mountaineering feedback collection the with despite which trekking including our number category for AMP the are time.

selling of the increase primarily additional challenges. new that for brought Rocky competitor lot Though athletic This its growth it excited to Rocky about. and Rocky and new in and despite on for are Ordering temporary the programs the of carrying our the new products due through over has existing part were has strong upward build that retail to Western. Work trend exclusive face was inventory early Western, continued shelf was business. Rocky product and product able partners includes with large Like of the new the the capitalize industrial in well. on quarter quite and in Western bestsellers, third drove Zappos, during even we Something space. to the disruption, allowed delivered very that distribution gain struggles has strong a grow program sales supply explosive been traditional

this retail single QX in online on Turning segment, a combination a channel to digits a sales in tough the time. year, our low portion down of this ecommerce was of and orders in delay our increase comparison reflecting of XX% XXXX, processing following

third-party to we state, sales As our more we've from see XX% product to sites increased Estes from expanding QX. launched by Sales and facing Schnitzer some by normalized direct supply our driven account pandemic. The recently, retention, the resumed recovery accessibility efforts comparisons and marketplaces, year the its functionality ease, shipping Meanwhile, COVID-XX Lines, e-commerce from of Stryker over growth, to Corporation, and accounts, new work in we continues further last chain still our challenges. expect and issues, consumer now that headwinds Target Steel eBay. including to and fueled height return Lehigh to done of and and enhancing Plus related both delays is Express Amazon, particularly the stemming business the higher

QX. hood having here However, other which Boston is supply the down participation account have business are Shifting keeping vendors, while has is to Resulting XX% like rates, shipments as been inventory total sales is revenue XX%. of accepting dormant positive open orders, us our of Group, late The for and canceling to were an accounts. docking that our started improve shipment demand high new Customers on drive has to high. alternative Cruise over recovery, now driven orders for not the we and success. on grow. Muck account to to increased show are chain, disproportionately vendors to like excellent to our QX shipping in the capitalize Line To options challenges opportunity group's signs strategy Unfortunately, replenishment per shipment hampered cross focused which inventory continues and XX-months SMS and higher. continues opportunities nearly and container email this, gives XTRATUF, do

the its for and the state Boston Ohio earlier, remain important our New good returning We over of the brand. DC savings confident with discussed DC, that are we've realize we be integration fulfillment made to terms people efficiency. technology to along in progress able Reno lowering time meaningfully In of we investments making toward the as Group will with by historical costs

is service for executing on newest consumers with track Rocky's are migrating brands, system off customers our world-class years. This We and providing and step Rocky acquired on end to ERP at the to critical the business Honeywell's the been we've this with of year. also by

encountered true confident advanced to While we our are capture I'm experiencing temporary the am fulfillment setback necessary of the disappointed that the during our brands. quarter, fully capabilities, taking portfolio the we we and third leading are demand in restore actions I for

growth Tom. turn opportunities, the creating for call never has Tom? future are the I'll to company we brighter. With been the the the long-term significant for now business, over

Tom Robertson

Jason. Thanks,

was growing outlined, quarter by related this integration Jason hampered challenges. demand As distribution

increased XX.X% with quarter XX.X% record to to compared and XX.X% to $X.X previous million, increasing sales XX.X% $XX contract quarter manufacturing sales $XXX sales net sales million, for sales year-over-year retail million, third the challenged, While million. of $XX.X were the increasing to to wholesale

million the The retail of our acquired Boston approximately quarter sales Group, this year million wholesale includes $X segment in $XX.X in brands $XX and from or third million in falling with segment. the

profit, Gross and mix our acquire than margins compared with the expenses XXXX a contract segment to a and to wholesale quarter which manufacturing accounting XX.X% in segment retail and ago by of $XXX,XXX same primarily of period gross to margins last gross increased brands, costs manufacturing to $XX.X of XX.X% third of were point increase million, sales due USA with to XX.X%, margins The XX.X%. segments. as million, or higher XX.X%, profit Turning were decrease which attributable million, was for or net third wholesale or sales quarter or quarter, wholesale margins million sales $XX million inventory XX.X% and year. gross associated adjusted adjustment $XX.X carry were compared to $XX.X compared of Adjusted contract sales or to this retail margin follows; adjusted period, for sourcing for net gross the XX the XX.X% XX.X%, net wholesale segment XX.X% XX.X% of Operating was purchase manufacturing a $XX.X year. gross last margin an of the excludes basis sales. lower sales lower gross in year

Excluding of the was associated $X.X expenses of third we integration operations million XXXX The expenses, by in in with sales. March operating operating this the amortization XX.X% expenses from primarily quarter increase driven acquisition decreased million was or brands acquired Income were net expenses net million in inventory ago year. $X.X related $XX.X of million, year $X.X and compared of period. sales in X.X% to $X.X adjustment, operating net acquisition or of net with XXXX, sales. sales, X.X% or or purchase which expenses income QX accounting million Adjusted related excludes a in XX.X% the

interest reported expense third period. with essentially the expense use and The acquisition. to facility interest On of $X.X the in we term year For interest compared GAAP we $XXX,XXX, on third $X.X or of loan million, a a increase no diluted quarter basis, income share. net of footwear reflects was XXXX the Honeywell per the the $X.X third $X.XX of net this quarter a $X.XX year, diluted or credit diluted ago per to was million payments Adjusted share in net senior fund loss of the $X.XX for million, compared share, quarter income per or XXXX.

senior senior secured sheet, our end equivalents cash credit debt loan $XXX.X totaled quarter third term the stood borrowings $XXX at backed consisting the Turning million to secured and and of and facility. our $XX.X asset cash facility, of million our million balance under at

had of facility. million, we increase borrowings associated we end quarter are second-half brands on congestion our the was million $XX.X the million to includes compared $XX.X third the of Due at approximately ago schedule acquired of million our $XX outlook. XX period. year The this not As center, our impact results to XXXX, our quarter. million of and Inventory under million the in updating a $XXX did the credit from orders from $XXX.X distribution available third ship that in with $XX approximately September

million. currently sales to expect $XXX sales our $XXX group XX%. XX%, to previous and we net $XXX expecting in grow outlook net for XX% between to Ohio we quarter, the year sales XXXX group, and million are and full fourth range million the approximately to million of now For between be net compared of By $XXX

versus of approximately group, previous expecting Boston our While full be our sales we year are X% to to now XX%. net forecast up flat

reminder, March on we in Group based the a acquisition As of timing recognize only Boston XXXX. of will the sales, XX% of the

we Operator, we acquired the are discussed for impacted are issues disproportionately concludes now shipping ready temporary experiencing As Jason earlier, That and fulfillment brands. the prepared remarks. our questions.

Operator

you. Thank

be will you. Thank session. conducting Instructions] question-and-answer now a [Operator We

Our first Please B. your Riley. question with question. comes from Anderson Susan with proceed

Alec Legg

Legg this Or wholesale? Alec did that around accounts was their too? that, that? for in inventory, for question mentioned not the on ship that or reduce is And the related of question. even much on $XX to not retail quarter. that Thanks component It's in there Hi. Was million how A Susan. the all what seasonal? is pull inventory taking And did our orders you ship risk that wholesale some

Tom Robertson

so I'll and hop can then Yeah, start Jason in.

our So certainly it's of the exclusively all $XX impact million, some business. almost retail, not was behind the There but wholesale as really of was wholesale business retail nearly business. the

So wholesale. be that all almost exclusively would

we're center. we having seeing issues cancellations, were that a cancellations. And for distribution of the As we lot recognize in the not

for needed have we more as door hunting season. so, in did was to the And product we what that best did stock prioritize seasonal, our inventory such that be hunt out to

cancellations of ours in So, like amount of we the best product. seeing not again, retail But the still prioritize significant our a that. did we're to partners

Jason Brooks

sell on just standpoint, hunting seasonal Yeah. that. obviously, the And we foods. From work boots, insulated add I Alec, would

think, not I they orders, in to that we it. can are the living the environment right inventory willing are because when cancel now, they want of retailers get

out so we're getting are boots but Or behind. little we're at some behind, you may And lot a door. they we the tell a least

sell believe we is beginning that if sellable, the and fall. even we Tom store year, back in And we the And to still next go into as you your our so haven't happen. it that want it indicated, just and seen as product room of

Alec Legg

of work say to a needs the Thank I in you quick what's are be and integration inventory? What you and done? already what And inning brands Honeywell's Perfect. guess their done with then follow-up. And you. would

Jason Brooks

or now call, so the the Yeah, DC. either open is we in indicated our up did Logan of all inventory DC, we Reno as on the

inventory have we places. So both in

right is out on inventory happened. that system, We we the the be the And own there I and report by this We all of happy processed I'm are in to out through said, are be of very of And Honeywell and still ERP track is being and XXX% now. did off say the August, of done everything congestion to year. Honeywell's of our also end that DC. and on of track we'll year. accomplish end But feel is And of out. able confident say by that the that middle we as to the be the really September, that DC,

slowly have to or the realistic shipping been we've than had to And to able slower ways resolve so I capability. some to a unfortunately XX/X still we got eliminate year. this to move hoped go. get through able to And worked But been more we try to really back We issues.

I year, helpful full Reno DC. mid-late but probably a think next QX DC the will as until be not functioning

trying in that We that anywhere are hire ship labor three and now. seeing is surprise we people, ago weeks direction moving the better the no week right are comfortable two are major But which right to today and were we there and weeks we pretty ago. issues out able are anybody feel ago in we I to and than to world a

Tom Robertson

Yeah, just distribution little to specifics the give a on numbers. there clarity

congestion - August back their So peak look issues and if of of kind the you with highs in things integration. hit the

Xx excited, progress made pair every it, shipped from put the standpoint. what August, we're October, month just we we've of in So, And, shipped week. Jason very in as a over we

we can And where do in and need better to so at we we're efficiently. and we that know even do more October,

- functioning, some the issues automation some Reno getting think put the we it be in. while and with that, getting of was of and up And equipment so will there's not

up be the the first to Reno, functioning middle to guess, So the it to, standards quarter. beginning out our of I won't we're to end just still of

Alec Legg

Very helpful. Jason, Thanks, Tom.

Operator

you. Thank

with BTIG. with Camilo Our next question. Lyon question your is proceed Please from

Camilo Lyon

to received greater that understand little I'd love Group packaged just exactly there inventory, that was initially issues Boston the issues afternoon. Good it really bit a detail you. you Thank were I what were. the in when differently. know

you bags. of So could for you at to that the that with plastic what I of to you had efficiency needs were. shoes just - had start you whole go issues think happen level really help understand to of reboxing to? kind the through And if what to expect And exactly the a us operating

Jason Brooks

Tom, start I'll so this we've pretty I'm and sure, been Yeah, heavy. in

this really to about to sure Tom It's issue, will add. I'm So pieces have right. multiple something

So in and set idea you codes, warehouse. the how boxes being than as you their the our think and was UPC warehouse the and stated, about the around coming inventory it up different versus

so was of that piece. And one kind really

Our DC sort was were we way. be it because DC, and also set more capable doing pack a of up of to of kind that

customer case larger packs with that started business as orders. in ship packs a three get more XX, on the and And packs the was fill and four we or XX, the XXX to And were in Honeywell pack also pair. in, So packs. were done week, packs, is learned would either every us in them case case call six our we and we would inventory what

inventory the the you the to DC had And way into so as put was not efficient.

three I'll versus as one. of one. have but help could I ours it I if pull where lot, pull two had we needed I it And to of put a now is six, inefficient to So to pull back, pack case like just back two to sound two know where doesn't those packs that in

only Logan. not Rocky about we them. me come was, obviously they that the were other Muck were we NEOS The inventory. to notices saw inventory shipment and also the And came, issue coming Servus, brands inbound excuse Logan, as And but not receiving to to the starting was XTRATUF, really

of we time them we just put so inventory more them on to based scan and new And Georgia put our it would a those report off an Rocky that take than products, got. took have it Durango label away. unload that And we containers,

more them the inconsistency And putting way was on So of would and then the time. then in racking labels, up. the those taking putting show the them containers taking boxes the

the right a get and have would for day. now, a XX couple pretty flow then that we is five, today, containers containers. normal XX normally, Well four, would containers everybody a and with what is logistic then of six problem containers we aware three, no right, two So days,

it people backup able of and we a this have longer. And took to really then long of And we were longer level deal affected we taking at people inventory hire hoped. had the of was process a closed a the people so or capability. third lot around hire that. us speed up it's bit Well, moving that And not these before But that started longer We to as getting hiring little thing. and us the the bit we those in piece then as were people August, the those knowing to was quickly taking little March.

problems. So those are of I think kind the

that DC need So all we've become was system organization have now And and whatever - customers. through the not containers constraints, way Honeywell, We to are do say, the they're to the mentioned processes a deal. the our that labeled thing have a need day. think DC, DC people done with do every we the and able come in been they're job the process better are have shipping ability exceptional rearrange we our efficient notes, of I getting done direct that's more did they're that I there, changing And final But to them so I'll then way to them. and within Boston for Group that has one the working would in big helped. then the to the an boots my in we them, obviously, able they we that. a And not

add? done team have anything team did working the to Tom, that happen. that And has a make job great finding to those to containers. logistic with divert so are really we And ways you

Tom Robertson

bit I on of about points think distribution Yeah, everything I hours could made. center. a little talking look, think, But Jason spend about I one mean, we I the want the touch to

And to all distributed, limitations ship one system, the it through product they Jason order, back ran through directly center, their alluded think as customers. the we if had every one distribution containers so, distribution where they all Boston to was how center. system U.S. ran single Group And couldn't

if orders, we third-party if or business, about, we those back, today, to directly factories factory either the take Ohio ship the our a we own source from customer. so large factories, and have group And the prior the think step acquisition to seasonal from

And center, different really so a center, Jason was that distribution order set challenging sets on replenishments, distribution especially touched our is on. up which that

lag great And news state, is to they'll there's of distribution that at because a really with our today, here so have of the process the centers, we orders future lot we can really And, these in straight system. the the to inventory items now bigger seasonal even order factory will those that we sets through as on Group, go But, us. lot be through our going a not some customer. the large of from this, go coming those source have Boston

Group orders, And Boston Group suitable we the that for improvement. think fulfillment product, more the a big method. be the nature actually is that'll So direct of Boston that

so excited see the how can that move pressure warehouse XXXX. into off we alleviate to as much And we're the

Camilo Lyon

lot for that I prior today you're on to it a goods. that a on of much basis out really created helpful. answered at maybe of basis, that? delays how with quantify these That's week's question where Thank seasonal And the week inventory? a think in weak you Is maybe prioritized helpful shipping you've you detail.

now of the right particular sound have. a season inventory So with the concerned with missing part of you're like doesn't it that overly kind you

to that you'll not fulfilled? do bulk feasible So this and is next? we into quarter ordered chunk this expect were expected but recoup it of that how think Or, of that about deliveries and

Tom Robertson

Yeah.

seen some, for again, We're Friday. we we as to have been significant try the think, product probably due not we There said prioritize, So Black earlier, to that that's really I prioritize could. retail we've products seasonal cancellations. continuing to

focused at And think, out of right. the we're I marketplace, of economy, And just if overall on so an look that. it's stock kind you

partners having issues there's while whole lot and they're our us, that we And substitutes. different peers, so, of chain know lot supply our of not a than a

is there's know not for so the And we demand demand, product. issue the the

is important Puerto and be Caribbean out and supply For chain peers, our center. Dominican that, more of kind and given we've than to it's the our call our vertical of demand quicker the distribution us, the our proven nearshore with out I efficient getting it sourcing Rico. think integration just can the I And some that with of think

And had so, the think fast enough. proven We kind the we've the I door and just get we we out of had that inventory, didn't demand.

And up on missed out is the we're product. fourth so think that's we catch to is where all demand continuing ability in simply distribute to now the outpace getting think, I the sales do don't going the door. the quarter, to because the focus

But again, are any not guidance there that's any for some closely clear cancellations we've for so quarter. we And the carry that us seen really we QX. why fourth gave but got Inevitably, significant will concerned. be over cancellations monitoring QX, into

Jason Brooks

good think And, add right, million just Tom's, he notes, million. I pretty to we said $XXX to to Yeah, $XXX about Tom's QX was in that. like we, feel

acquisition. see next QX, what not to is and QX move So the XXX% going probably picking really missed canceling happen question have wait And into Again, But QX to goes. to of have as to big is as we'll yet, in DC. not to a progress. shipping the about But making accomplish month pretty ways out QX. in over still good was we're it's of before we feel again, how to the perfect, forward? to roll is, is and anybody year. that those we of And, question, October going your pairs was been up really going to we've make good in in it go able we start the it last And, as

Camilo Lyon

Thank you color. for that

look discussed But detail. list greater want your at of think remain, you I tasks in a bit. kind you integration little that of dig to I As

the be DCs the now into that initial had hired, people visibility smarter, receipts on moment of? burst aware the you're least mend? biggest any a and that on two of other been you're better you have of efficient, the incremental should inventory you've Ohio, getting more now digest taking or and a that's there python are have now there's volume known integration trying kind with this to digest line that try that issues getting you're getting that and better, Now in was this sight that the major to groups we at Or come issues, board, of these of more lot are

Jason Brooks

because Yeah, we well. issue. Like And were would we we we this is efficient, shoes you don't an believe we good this. shipped were good, call to the like tell it I that I issue, biggest even were at

If well. Prime, and our got you in recall, out that is really Amazon DC DC of shoes we

the so really getting these be frustrating over, dealt But to And take But the I of solve integration and getting our from system. the pushing they've of I'm I'm has to that working about all just know and to issues, the be credit getting just now done through that's IT we monotonous amazing And time But job apps, of got us have them. team would an customers stuff ERP, sure rest orders doing with it's get crazy to other department the kind we to them. their over, here. getting right through maybe working that off done get of off. this me that, how it now angry been

DC customer the It's it organization good job. customer amazing. good really a at a that, don't We've at I But say Our out done we'll service get with to thing surprised. pretty like surprised because this and again. they've been came that of it service this were me, be I Mexico, there was hate we good department, division

Tom Robertson

more got the we've years this. off up center we reset the so the we had it with to distribution do get the another and acquisition to just in in to few with which quarter to efficient it this get the on have a we timely exception We a is to really of know of said think we prior we've be ourselves another distribution I executed acquisition, prided results our seen in up Yeah, acquisition. product, the way, plan that and something some leading manner. door And the almost the that capacity to on entire today, to know ability the can and leading

we long a that think time. will So, lingers this for very an don't be issue

Camilo Lyon

payments you so was did And Last question are shared complete cost? is during the you those with to me services Great. that? incremental If quarter? have Honeywell any for costs what

Tom Robertson

Yeah.

So I to, you're yeah. think so know speaking I

transition with TSA Honeywell. had So, or agreements we services

the We out earlier distribution of in the vast, one, of the the in the the vast as be are completely year. majority August. of got largest end said of which will we by The was Jason those. And we of out out call, of middle

expenses, costs at third you be. think quarter. if those we I cost, So significant were there efficient the had also as as mean, the look the We're we distribution should at were we duplicative some in inefficient but still operating we certainly duplicative But center. not

not efficient we from to most need us. of more had of go labor that fourth we those that. most as as we've leverage be to quarter. constraints, with mention didn't the the And standpoint. things after to such more costs top-line expenses. labor yeah, into But But, the Again, duplicative With costs we expensive really a of temp behind distribution and got out our the way, are sales, the go operating we

Camilo Lyon

gentlemen. you, luck good And with the Thank year. the of balance

Tom Robertson

you. Thank Great.

Operator

Thank you.

from Our comes Please proceed last question with question. your with Jonathan Baird. Komp

Jonathan Komp

just boil there of the third the you follow-ups, everyone. first, from profit an Thanks, is A Hi. and overall easy disruptions? the at couple way impact quarter, to or margin Yeah. look down the when just revenue

Tom Robertson

so, were an quite think and been. Yeah, I being again, that to obviously, have we off. way. as top-line But is don't mean, I easy there's I we not said, mean, have have been way, that think, terribly would we said another liked as from consensus, think we would not efficient I the I the

brand the of Muck the The strong out product, during transition. in issues margins was a we haven't carries the margin distribution that that impacted got and the we little bit has our we spoke we Group Boston impacted negatively about spoken disproportionately probably a was, that thing value center which product other that move particularly lower more a brand. The brands, margin, Muck this the had

quarter challenge there. So if as headwind margins or the that negatively third a - don't in know have I that well. on you anything Jason, a was on our out

Jason Brooks

No, you got it.

Jonathan Komp

and then comment And October Okay. on follow-up of the the a pairs.

relative that you state? where Can be? it where that to to expect double when an to be level maybe shipped processed to October, And was August. you or able you've you comment it in process you to the processed ideal should pairs to amount just I the need needs your be get think on

Tom Robertson

had would what XX% than about did in say - done we wanted we to if where we I Yeah, October. if were we hitting we have do, more would

Jason Brooks

we even to week, by if you fourth. by the really September, second in in we're at it's day, if looking week it you in so better the week, are week October got at first and but add, Jonathan. the But we've gotten which we in at and we look gotten third better, I the like, by last better it in looking want and - at Like just week look

you look we more. every that the said, So, at have getting about XX% would it's Tom if better seen like whole month liked But, maybe week.

Tom Robertson

as Jonathan integrate the in than we and them chain ship more and flexibility divert or port around to out. supply at And to down them partners containers our third orders did too, quarter. to even we we've point continued that into leveraging have containers systems We're our break today shuffling

product to retail working were to get diligently our solutions we find very to other partners. So the

Jonathan Komp

double really expect? mention Okay, full on should color a And that's you for or And then operating think any comment you we the I'm helpful. what which still have year margin didn't specifically, a is comment Is to additional revenue, on earnings. digit can you if way any there? Tom there or year just helpful. wondering follow-up around this margin

Tom Robertson

say, and we that. in supply continuing margins, to labor some manufacturing freights facilities. with constraints our have to I relates like incentives some previously costs, also the XX%. And things would it of to as U.S. we're and so, chain guided Yeah, experience

And so full the down we XX% year, XX%. probably bring closer that for down from the to bit, a little range probably

any to As not income, real we're guidance to think further it operating give any this. going I on relates

a the I efficiencies. think with parts lot still of moving there's

and efficiently of as center, the their distribution would capacity we we've doubled like. While we're as still not doing nearly

And you guidance to give on we're income. further going so operating not

Jonathan Komp

what in that one point, Group recapture know grow anything of next Yeah, you for the And XXXX Boston you XX% lost then right you expected the by this makes I year. I is, assume you do just baseline sense. me, you don't about as sort group. think into for one to know Last at year?

for So about just how any context on we think actually such modeling a as variable, next the should Boston we year, Group opportunity? about think big

Jason Brooks

but of This everybody's assume we year. from are are have the season. of dealers trying And disrupted as Jonathan. bottom to they and strong. we obviously it's great question, I next middle think may this buy really well. in obvious, through And, less budget a weed that any brands - the We a is, is The question question are is still us to we know big where

And well, that fall probably go it's QX, going yet think is we're not here. we so we next but great it's from perfect XX% as to into standpoint. to struggle, But into DC question navigate we next a aggressive believe And opportunity little a that and we're not to going be there's still year. year. trying

Tom Robertson

we kind XTRATUF. a about know spans Muck, the Rocky, for that as think ton brands, Durango, we really, of and of demand think, I Yeah, Georgia, and there's that this,

in in the some increases And that. one, sure demand see we're think But volumes XXXX. might so couple to significant aggressive they we've our We seeing we a chain some If brands. a outlook we taking there's and supply get visibility for that the more driving this things also, for we retailers the issues, our making bookings their into bookings. time. We're with speaks seeing think think orders got of

have demand we influx distribution and inventory to QX we progress able do about more more and for as our importantly, to we'll hopefully, integrate we that execute from QX, to into the importantly, QX think get handle quarter, we as orders and And significantly so ability standpoint, fourth greater business there in fulfillment QX, that the get as probably very of can seasonality we proven the throughout think then flexibility, again, next of is year, we'll we us. to the QX, we the and all a and our into see. continue make and direct will be next we'll and the orders. year amount lot system, But Again, the we've a in

feel on here inventory right not So about everybody's think now. this, as stock everybody is now internally And the whole as to it out time. out because, the probably door quite think environment in right just struggling standing get I I out we're with that the getting key horrendously, inventory, of we

given supply in how So, of it's to we're and whole believe we lose just a shelf our everybody don't crisis global space, going impacting lot chain this industry.

Jonathan Komp

the best Understood. with continued luck and Appreciate the here. color all of progress

Jason Brooks

Jonathan. Thanks,

Operator

Jason at time. There for any comments. turn no you. closing over would the to Thank like further floor are questions this I to back Brooks

Jason Brooks

appreciate brands exceptional. have as like these as all I Yeah, has for consumers your patience. Brand we'll their can. and efforts all great the to in all And employees customers thank the been for is to world during quick get you out our have their And in we this the thank and that to just around you also exceptional. you very much. this passion integration. the States And want And, I'd The time. thank employees year. that we Rocky of United The made progress thank this time

Operator

today's concludes conference. This

may disconnect time. at Thank this You lines you participation. for your your

Rocky Brands (RCKY) 3 Nov 212021 Q3 Earnings call transcript