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What changed in ROCKY BRANDS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ROCKY BRANDS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+193 added−182 removedSource: 10-K (2026-03-11) vs 10-K (2025-03-17)

Top changes in ROCKY BRANDS, INC.'s 2025 10-K

193 paragraphs added · 182 removed · 147 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeLehigh The Lehigh brand was established in 1922 as a high-quality line of occupational safety footwear that later expanded into a full-service program offering. While still manufacturing and selling branded core product, the brand primarily focuses on providing managed programs to companies that require and provide a subsidy to their employees to wear safety footwear.
Biggest changeWhile still manufacturing and selling branded core product, the brand primarily focuses on providing managed employee programs to companies that require and provide subsidies to their employees to wear safety footwear and prescription safety eyewear. Most of the footwear incorporates a protective toe and can include a metatarsal guard, puncture-resistant, slip-resistant outsole and special materials to combat caustic substances.
The Company's portfolio of brands is organized into the following reportable segments, in which our products are distributed: ● Wholesale ● Retail ● Contract Manufacturing Wholesale We distribute Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, Ranger and Michelin products through a wide range of Wholesale distribution channels throughout the world.
The Company's portfolio of brands is organized into the following reportable segments, in which our products are distributed: ● Wholesale ● Retail ● Contract Manufacturing Wholesale We distribute Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, Ranger, and Michelin products through a wide range of Wholesale distribution channels throughout the world.
Our sales force is organized around major accounts, including Boot Barn, Tractor Supply Company, Amazon and Bass Pro, and around our target markets: work, outdoor, western, commercial military, duty and military. Our sales force is also organized around brands, regions and customers to target a broad range of distribution channels.
Our sales force is organized around major accounts, including Amazon, Boot Barn, Tractor Supply Company, and Bass Pro, and around our target markets: work, outdoor, western, commercial military, duty, and military. Our sales force is also organized around brands, regions and customers to target a broad range of distribution channels.
Our outdoor product lines consist of all-season sport/hunting and fishing footwear, apparel and accessories that are typically waterproof and insulated and are designed to keep outdoor enthusiasts comfortable on rugged terrain or in extreme weather conditions. ● Western.
Our outdoor product lines consist of all-season sport/hunting and fishing footwear, apparel and accessories that are typically waterproof, insulated, and are designed to keep outdoor enthusiasts comfortable on rugged terrain or in extreme weather conditions. ● Western.
We believe the Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, Ranger and Michelin brands are well recognized and established names that have a reputation for performance, quality and comfort in the markets they serve: work, outdoor, western, commercial military, duty, and military.
We believe the Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, Ranger, and Michelin brands are well recognized and established names that have a reputation for performance, quality, and comfort in the markets they serve: work, outdoor, western, commercial military, duty, and military.
We own numerous U.S. and foreign registrations for the patents and trademarks used in our business, including our major brands Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, and Ranger. In addition, we license the use of third-party trademarks, including Michelin, in order to market our products.
We own numerous U.S. and foreign registrations for the patents and trademarks used in our business, including our major brands Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, and Ranger. In addition, we license the use of third-party trademarks, including Michelin, in order to market our products.
We actively enforce our trademarks and patents, and pursue those who infringe upon them, whether domestically or internationally, as we deem appropriate. Competition We operate in a very competitive environment. Product function, design, comfort, quality, technological and material improvements, brand awareness, timeliness of product delivery and pricing are all important elements of competition in the markets for our products.
We actively enforce our trademarks and patents, and pursue those who infringe upon them, whether domestically or internationally, as we deem appropriate. Competition We operate in a very competitive environment. Product function, design, comfort, quality, technological, and material improvements, brand awareness, product delivery timeliness and pricing are all important elements of competition in the markets for our products.
Manufacturing and Sourcing We manufacture footwear in facilities that we own and operate in the Dominican Republic, Puerto Rico, and Chuzhou, China and source footwear, apparel and accessories from third-party facilities in China, Vietnam, India, the Dominican Republic and Mexico. We do not have long-term contracts with any of our third-party manufacturers.
Manufacturing and Sourcing We manufacture footwear in facilities that we own and operate in the Dominican Republic, Puerto Rico, and Chuzhou, China and source footwear, apparel, and accessories from third-party facilities in Vietnam, China, the Dominican Republic, Cambodia, Puerto Rico, India, and Mexico. We do not have long-term contracts with any of our third-party manufacturers.
We believe that our internet presence allows us to showcase the breadth and depth of our product lines in each of our target markets and enables us to educate our consumers about the unique technical features of our products. Outdoor Gear and Retail Store We operate the Rocky Outdoor Gear Store in Nelsonville, Ohio.
We believe that our internet presence allows us to showcase the breadth and depth of our product lines in each of our target markets and enables us to educate our consumers about the unique technical features of our products. Outdoor Gear Store We operate the Rocky Outdoor Gear Store in Nelsonville, Ohio.
We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names, including The Original Muck Boot Company ("Muck"), Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, Ranger and the licensed brand Michelin.
We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names, including The Original Muck Boot Company ("Muck"), XTRATUF, Rocky, Durango, Georgia Boot, Lehigh CustomFit ("Lehigh"), Ranger, and the licensed brand Michelin.
Therefore, the success of these products and styles are more dependent on our ability to anticipate and respond to changing product, material and design innovations, as well as fashion trends and consumer demands in a timely manner.
Therefore, the success of these products and styles are dependent on our ability to anticipate and respond to changing product, material and design innovations, as well as fashion trends and consumer demands in a timely manner.
In addition, mild or dry weather conditions historically have had a material adverse effect on sales of our outdoor products, particularly if they occurred in broad geographical areas during late fall or early winter. 7 Table of Contents Backlog The dollar amount of our order backlog as of any date may not be indicative of actual future shipments and, accordingly, is not material to an understanding of our business taken as a whole.
In addition, mild or dry weather conditions historically have had a material adverse effect on sales of our outdoor products, particularly if they occurred in broad geographical areas during late fall or early winter. 6 Table of Contents Backlog The dollar amount of our order backlog as of any date may not be indicative of actual future shipments and, accordingly, is not material to an understanding of our business taken as a whole.
Our Wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers and online retailers.
Our Wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers, and online retailers.
Approximately 1,690 of ou r employees work in our manufacturing facilities in the Dominican Republic, Puerto Rico and Chuzhou, China. We believe our relations with our employees are in good standing. Employee Well Being Founded from the humble beginnings of a small, family owned business, our employees have always been the key to making our Company successful.
Approximately 1,700 of ou r employees work in our manufacturing facilities in the Dominican Republic, Puerto Rico and Chuzhou, China. We believe our relations with our employees are in good standing. Employee Well Being Founded from the humble beginnings of a small, family-owned business, our employees have always been the key to making our Company successful.
As the established leader in the industry, Lehigh introduced and utilizes 3DFit technology and wellness foot products as a way to elevate safety and improve productivity. By providing an accurate fit, body aligning orthotics and anti-fatigue compression, Lehigh helps companies go beyond accident protection to full body wellness protection.
As the established leader in the industry, Lehigh introduced and utilizes 3DFit technology and wellness foot products as a way to elevate safety and improve productivity and employee satisfaction. By providing an accurate fit, body aligning orthotics and anti-fatigue compression, Lehigh helps companies go beyond accident protection to full body wellness protection.
Our Wholesale distribution channels vary by market: ● Our work-related products are sold primarily through work-related retailers, farm and ranch stores, specialty safety stores, independent shoe stores, hardware stores and online retailers; ● Our outdoor products are sold primarily through sporting goods stores, outdoor specialty stores, online retailers, catalogs and mass merchants; ● Our western products are sold through western stores, work stores, specialty farm and ranch stores, online retailers and fashion-oriented footwear retailers; ● Our commercial military products are sold primarily through base exchanges, such as the Army Air Force Exchange Store (AAFES), and consumer e-Commerce websites; and ● Our duty products are sold primarily through uniform stores, catalog specialists and online retailers.
Our Wholesale distribution channels vary by market: ● Our work-related products are sold primarily through work-related retailers, farm and ranch stores, specialty safety stores, independent shoe stores, hardware stores, and online retailers; ● Our outdoor products are sold primarily through sporting goods stores, outdoor specialty stores, online retailers, and mass merchants; ● Our western products are sold through western stores, work stores, specialty farm and ranch stores, online retailers, and fashion-oriented footwear retailers; ● Our commercial military products are sold primarily through base exchanges, such as the Army Air Force Exchange Store (AAFES) and consumer e-commerce websites; and ● Our duty products are sold primarily through uniform stores, and online retailers.
Quarterly, our CEO and COO hold all-employee communication meetings to keep our employees apprised of recent happenings within our organization and to allow employees a forum for their voice to be heard. 8 Table of Contents We are committed to having a workforce which reflects a wide range of perspectives as well as varied professional and educational backgrounds.
Quarterly, our CEO and COO/CFO hold all-employee communication meetings to keep our employees apprised of recent happenings within our organization and to allow employees a forum for their voice to be heard. 7 Table of Contents We are committed to having a workforce which reflects a wide range of perspectives as well as varied professional and educational backgrounds.
We intend to continue to source a higher proportion of our products from third-party manufacturers, which we believe will enable us to obtain high quality products at lower costs per unit. 5 Table of Contents Growth Strategy We intend to increase our sales through the following strategies: ● Expand into new target markets under existing brands.
We intend to continue to source a higher proportion of our products from third-party manufacturers, which we believe will enable us to obtain high quality products at lower costs per unit. Growth Strategy We intend to increase our sales through the following strategies: ● Expand into new target markets under existing brands.
For over half a century, Durango has earned a reputation for building authentic western boots using exceptional materials and innovative constructions. Our current line of Durango products is offered at suggested U.S. retail price points ranging from $120.00 to $655.00 . Our brand portfolio categories include work-western, farm and ranch, western-performance, premium exotics, fashion-forward and casual wear.
For over half a century, Durango has earned a reputation for building authentic western boots using exceptional materials and innovative constructions. Our current line of Durango products is offered at suggested U.S. retail price points ranging from $90.00 to $680.00 . Our brand portfolio categories include work-western, farm and ranch, western-performance, premium exotics, fashion-forward, and casual wear.
To further increase the strength and awareness of our brands, we have developed comprehensive marketing and advertising programs to gain national exposure and expand brand awareness for each of our brands in their target markets. 6 Table of Contents We have focused the majority of our advertising efforts on both digital advertising and consumer advertising in support of our retail partners.
To further increase the strength and awareness of our brands, we have developed comprehensive marketing and advertising programs to gain national exposure and expand brand awareness for each of our brands in their target markets. We have focused the majority of our advertising efforts on both digital advertising and consumer advertising in support of our retail partners.
Our customers' employees order directly through their employers' established CustomFit website, and the footwear is delivered directly to the customer via a common freight carrier. Websites We sell our product lines on our websites at muckbootcompany.com, rockyboots.com , georgiaboot.com , durangoboot.com, lehighoutfitters.com, lehighsafetyshoes.com, xtratuf.com, a nd slipgrips.com , as well as through online third-party marketplaces.
Our customers' employees order directly through their employers established CustomFit website, and the footwear is delivered directly to the customer via a common freight carrier. Websites We sell our product lines on our websites at muckbootcompany.com, xtratuf.com, rockyboots.com, durangoboot.com, georgiaboot.com, lehighoutfitters.com, lehighsafetyshoes.com, and slipgrips.com , a s well as through online third-party marketplaces.
Fueled by the strong growth in the outdoor market, particularly white boat lifestyle and sport fishing, the brand has been adopted by non-fishermen seeking quality, functional footwear. Our current line of XTRATUF footwear products is offered at suggested U.S. retail price points ranging from $50.00 to $195.00 .
Fueled by the strong growth in the outdoor market, particularly white boat lifestyle and sport fishing, the brand has been adopted by non-fishermen seeking quality, functional footwear. Our current line of XTRATUF footwear products is offered at suggested U.S. retail price points ranging from $45.00 to $205.00 .
Ranger Ranger primarily serves the outdoor recreational market and offers a range of pac-boots that are built for wet and cold weather that provide exceptional comfort and function at a value price. Our current line of Ranger footwear products is offered at suggested U.S. retail price points ranging from $48.00 to $100.00 .
Ranger Ranger primarily serves the outdoor recreational market and offers a range of pac boots that are built for wet and cold weather that provide exceptional comfort and function at a value price. Our current line of Ranger footwear products is offered at suggested U.S. retail price points ranging from $50.00 to $90.00 .
Muck Muck was founded in 1999 and has pioneered the premium rubber and neoprene boot category by delivering high quality, innovative, weatherproof and comfortable products. Our current line of Muck footwear products is offered at suggested U.S. retail price points ranging from $55.00 to $265.00 .
Muck Muck was founded in 1999 and has pioneered the premium rubber and neoprene boot category by delivering high quality, innovative, weatherproof, and comfortable products. Our current line of Muck footwear products is offered at suggested U.S. retail price points ranging from $65.00 to $250.00 .
In order to meet these demands, we must manufacture and source footwear year-round to be in a position to ship advance and at-once orders for these products during the last two quarters of each year.
In order to meet these demands, we must manufacture and source footwear year-round to be able to ship advance and at-once orders for these products during the last two quarters of each year.
Lehigh provides and improves safety and health to a wide range of customer accounts in the industrial, distribution, hospitality and healthcare industries. The Lehigh brand line of safety shoes has suggested U.S. retail price points ranging from $91.00 to $295.00 .
Lehigh provides and improves safety and health to a wide range of customer accounts in the industrial, distribution, hospitality, and healthcare industries. The Lehigh brand line of safety shoes has suggested U.S. retail price points ranging from $91.00 to $295.00 . Prescription safety eyewear has suggested retail price points of $225.00 to $315.00.
Retail We market products directly to consumers through three retail strategies: ● Lehigh business-to-business including direct sales and through our CustomFit websites; ● Consumer e-Commerce websites (B2C) and third-party marketplaces; and ● Brick and Mortar Stores, which include our outdoor gear and retail store. 2 Table of Contents Lehigh We sell our Lehigh brand of safety shoes along with in-house and third-party branded work product to our business customers directly through our CustomFit websites, that are tailored to the specific needs of our customers.
Retail We market products directly to consumers through three retail strategies: ● Lehigh business-to-business including direct sales and through our CustomFit websites; ● Consumer e-commerce websites (B2C) and third-party marketplaces; and ● Our Rocky Outdoor Gear Store. 2 Table of Contents Lehigh We sell our Lehigh brand of safety shoes along with in-house and third-party branded work product to our business customers directly through our CustomFit websites, which are tailored to the specific needs of our customers.
We also advertise through targeted national and local cable programs, radio advertisements and print publications aimed at audiences that share the demographic profile of our typical customers. In addition, we promote through event sponsorships which provide significant national exposure for all of our brands as well as a direct connection to our target consumer.
We also advertise through targeted connected television advertisements and print publications aimed at audiences that share the demographic profile of our typical customers. In addition, we promote through event sponsorships which provide significant national exposure for all of our brands as well as a direct connection to our target consumer.
Michelin Michelin is a premier price point line of work footwear targeting specific industrial professions, primarily indoor professions. The license to design, develop and manufacture footwear under the Michelin name was secured in 2006. Suggested U.S. retail prices for the Michelin brand are from $210.00 to $237.00 .
Michelin Michelin is a premier price point line of work footwear targeting specific heavy industrial professions, that are primarily indoor. The license to design, develop, and manufacture footwear under the Michelin name was secured in 2006. Suggested U.S. retail prices for the Michelin brand are from $230.00 to $250.00 .
Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $48.00 for our value priced products to $655.00 for our premium products.
Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $45.00 for our value priced products to $680.00 for our premium products.
The license agreement for the Michelin brand expires on December 31, 2025, with the option to renew. Product Lines Our brands are organized into six distinct product lines, which consist of high-quality products that target the following markets: ● Work.
The license agreement for the Michelin brand expires on December 31, 2028. Product Lines Our brands are organized into six distinct product lines, which consist of high-quality products that target the following markets: ● Work.
In the U.S. and China, our design patents are generally in effect for 15 years from the date of issuance. Our utility patents are generally in effect for 20 years from the date of the filing of the patent application. Our trademarks are generally valid as long as they are in use and their registrations are properly maintained.
Our utility patents are generally in effect for 20 years from the date of the filing of the patent application. Our trademarks are generally valid as long as they are in use and their registrations are properly maintained.
Our products are primarily distributed in the U.S., Canada, the U.K. and other international markets, mainly in Europe. We ship our products from our finished goods distribution facilities located in Ohio and Nevada. Certain of our retailers receive shipments directly from our manufacturing sources, including all of our U.S.
Our products are primarily distributed in the U.S., Canada, the U.K., and other international markets, mainly in Europe. We ship our products from our finished goods distribution facilities located in Ohio and Nevada. Select retailers receive shipments directly from our manufacturing sources, including all of our U.S. Military sales, which are shipped directly from our manufacturing facility in Puerto Rico.
We also utilize quality control personnel at our finished goods distribution facilities to conduct quality control testing on incoming sourced finished goods and raw materials and inspect random samples from our finished goods inventory from each of our manufacturing facilities to ensure that all items meet our high-quality standards. Foreign Operations and Sales Outside of the U.S.
We also utilize quality control personnel at our finished goods distribution facilities to conduct quality control testing on incoming sourced finished goods. Random samples are selected for inspection from inbound finished goods shipments from each of our manufacturing and sourcing facilities to ensure that all items meet our high-quality standards. Foreign Operations and Sales Outside of the U.S.
In addition, as part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands. Segment Reporting and each of our reporting segments continue to employ consistent accounting policies.
In addition, as part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands.
As of December 31, 2024 , our products were offered for sale at over 10,000 retail locations in the U.S. and Canada as well as several international markets, such as Europe.
As of December 31, 2025 , our products were offered for sale in thousands of retail locations across the U.S. and Canada as well as several international markets, such as Europe.
Both new and existing consumer groups have welcomed line extensions from the brand as the total catalog expands beyond its core offering into premium leather and other new footwear categories. Rocky Rocky, established in 1979, is our premium priced line of branded footwear, apparel and accessories.
Both new and existing consumer groups have welcomed line extensions from the brand as the total catalog expands beyond its core offering into premium leather and other new footwear categories.
In addition, we utilize an office in China to support our contract manufacturers. The net book value of fixed assets located outside of the U.S. totaled $11.2 million at December 31, 2024 , of which approximately $3.7 million resides in the Dominican Republic and approximately $7.5 million resides in China. Resources and Suppliers We purchase raw materials from sources worldwide.
The net book value of fixed assets located outside of the U.S. totaled $11.1 million at December 31, 2025 , of which approximately $3.7 million resides in the Dominican Republic and approximately $7.4 million resides in China. Resources and Suppliers We purchase raw materials from sources worldwide.
We currently design Rocky products for each of our six target markets and offer our products at a range of suggested U.S. retail price points: $80.00 to $415.00 for our footwear products; and $18.00 to $160.00 for our apparel and accessory lines.
Rocky Rocky, established in 1979, is our premium priced line of branded footwear, apparel, and accessories. We currently design Rocky products for each of our six target markets and offer our products at a range of suggested U.S. retail price points: $85.00 to $439.00 for our footwear products; and $18.00 to $160.00 for our apparel and accessory lines.
We expect to continue to actively bid on U.S. Military contracts. Brands and Product Lines Our products are marketed under eight well-recognized, proprietary brands: Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF and Ranger, in addition to the licensed brand Michelin.
Military, we bid on private label contracts. Our sales under such contracts are dependent on us winning the bids for these contracts. Brands and Product Lines Our products are marketed under eight well-recognized, proprietary brands: Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, and Ranger, in addition to the licensed brand Michelin.
Our inability or failure to do so could adversely affect consumer acceptance of these product lines and styles and could have a material adverse effect on our business, financial condition and results of operations. Human Capital At December 31, 2024 , we had approxi mately 2,535 employees of which approximately 2,530 are full time employees.
Our inability or failure to do so could adversely affect consumer acceptance of these product lines and styles and could have a material adverse effect on our business, financial condition and results of operations. Human Capital As of December 31, 2025 , we employed over 2,200 employees.
We have also introduced western influenced work boots for farmers and ranchers. Most of these products are waterproof, come in soft toe and safety toe options and utilize our proprietary comfort systems. Georgia Boot Georgia Boot was launched in 1937 and is our moderately priced, high-quality line of work and rugged lifestyle footwear.
We have introduced western influenced work boots for farmers and ranchers. Most of these products are waterproof, come in soft toe and safety toe options, and utilize our proprietary comfort systems.
Each boot is designed to meet the demands of specific trades while also integrating cutting-edge technology and materials to create the most comfortable and durable footwear that is tough enough to handle the rigors found on job sites across America. 3 Table of Contents Durango Durango Boots was established in 1966 and manufactures premium western footwear for men, women, and kids.
Each boot is designed to meet the demands of specific trades while also integrating cutting-edge technology and materials to create the most comfortable and durable footwear that is tough enough to handle the rigors found on job sites across America. 3 Table of Contents Lehigh The Lehigh brand was established in 1922 as a high-quality line of occupational safety footwear that later expanded into a full-service program offering.
In addition to our national advertising campaigns, we have developed attractive merchandising displays and store-in-store concept fixturing that are available to our retailers who purchase the breadth of our product lines. We also attend numerous tradeshows which allow us to showcase our entire product line to retail buyers and have historically been an important source of new accounts.
In addition to our national advertising campaigns, we have developed attractive merchandising displays and store-in-store concept fixturing that are available to our retailers who purchase the breadth of our product lines.
Military sales, which are shipped directly from our manufacturing facility in Puerto Rico. Net sales to foreign countries represented approximately 3.2% of net sales in 2024 and 5.1% of net sales in 2023 . As previously mentioned, we also maintain manufacturing facilities that we operate in the Dominican Republic and Chuzhou, China.
Net sales to foreign countries represented approximately 2.3% of net sales in 2025 and 3.2% of net sales in 2024 . As previously mentioned, we also maintain manufacturing facilities that we operate in the Dominican Republic and Chuzhou, China. In addition, we utilize an office in China to support our contract manufacturers.
Georgia Boot footwear is sold at suggested U.S. retail price points ranging from $109.00 to $280.00 . This line of products primarily targets blue collar workers across various trades, including construction, logging, warehousing, landscaping and farming. Many of our boots incorporate safety toes and non-slip outsoles to prevent injuries in the workplace.
Georgia Boot Georgia Boot was launched in 1937 and is our moderately priced, high-quality line of work and rugged lifestyle footwear. Georgia Boot footwear is sold at suggested U.S. retail price points ranging from $115.00 to $285.00 . This line of products primarily targets blue collar workers across various trades, including construction, logging, warehousing, landscaping and farming.
Contract Manufacturing While we are focused on continuing to build our Wholesale and Retail business, we also actively bid, from time to time, on eligible footwear contracts with the U.S. Military. In addition to contracts with the U.S. Military, we bid on private label contracts. Our sales under such contracts are dependent on us winning the bids for these contracts.
Our outdoor gear store also provides an opportunity to interact with consumers to better understand their needs. Contract Manufacturing While we are focused on continuing to build our Wholesale and Retail business, we also actively bid, from time to time, on eligible footwear contracts with the U.S. Military. In addition to contracts with the U.S.
We also offer other more specialized protective features, such as puncture resistance, as well as metatarsal guards that protect wearers’ feet from heavy objects.
Many of our boots incorporate safety toes and non-slip outsoles to prevent injuries in the workplace. We also offer other more specialized protective features, such as puncture resistance, as well as metatarsal guards that protect wearers’ feet from heavy objects.
Most of the footwear incorporates a protective toe and can include a metatarsal guard, puncture-resistant, slip-resistant outsole and special materials to combat caustic substances. Lehigh offers an extensive selection of styles to fit any work environment. Lehigh’s unique business model provides companies with customizations to fit their needs and digital tools for greater visibility and control of their program.
Lehigh offers an extensive selection of footwear styles to fit any work environment and also offers prescription safety eyewear that meets OSHA safety standards. Lehigh’s unique business model provides companies with customizations to fit their needs and digital tools for greater visibility and control of their program.
Our license with Michelin Lifestyle Limited permits us to use the Michelin brand and related marks on our products. Our license agreement with Michelin Lifestyle Limited to use the Michelin name expires on December 31, 2025 , with the option to renew.
Our license with Michelin Lifestyle Limited permits us to use the Michelin brand and related marks on our products. Our license agreement with Michelin Lifestyle Limited to use the Michelin name expires on December 31, 2028. In the U.S. and China, our design patents are generally in effect for 15 years from the date of issuance.
Except as specifically incorporated by reference into this Annual Report on Form 10-K, information on those websites is not part of this report.
Our website also contains our Corporate Governance Guidelines and Code of Business Conduct and Ethics as well as the charters of the Audit, Compensation, and Nominating and Corporate Governance committees of the Board of Directors. Except as specifically incorporated by reference into this Annual Report on Form 10-K, information on those websites is not part of this report.
Product Design and Development We believe that product innovation is a key competitive advantage for us in each of our markets.
We also attend numerous tradeshows which allow us to showcase our entire product line to retail buyers and have historically been an important source of new accounts. 5 Table of Contents Product Design and Development We believe that product innovation is a key competitive advantage for us in each of our markets.
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S ee Note 19 - Segment Information of our Consolidated Financial Statements fo r further information.
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We also produce Rocky duty and commercial military, public service footwear targeting law enforcement professionals, military, security workers, fire industry professionals, and postal service employees, and we have established leading market share positions in these categories. Durango Durango Boots was established in 1966 and manufactures premium western footwear for men, women, and kids.
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Our outdoor gear store also provides an opportunity to interact with consumers to better understand their needs. Additionally, Lehigh has one retail store located at the Puget Sound Naval Base where we sell select product directly to customers.
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In 2023, we were awarded a new multi-year contract with the U.S. Military pursuant to which we will produce and ship a minimum number of pairs to the U.S. Military through 2026, with the option to extend. The first quarter of 2024 was the first full quarter, in which shipments were made to the U.S. Military under this multi-year contract.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe maintain an ongoing assessment and monitoring processes to gauge the impact that future climate change disclosures, regulations, or industry standards, and international treaties may have on our business and results of operations.
Biggest changeWe maintain an ongoing assessment and monitoring processes to gauge the impact that future climate change disclosures, regulations, or industry standards, and international treaties may have on our business and results of operations. 13 Table of Contents Our products are subject to increasingly stringent and complex domestic and foreign product labeling, performance, environmental and safety standards, laws and other regulations, including those pertaining to perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other environmental impacts.
We own U.S. registrations for many our trademarks, trade names and designs, including such marks as Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF and Ranger. Additional trademarks, trade names and designs are the subject of pending federal applications for registration. We also use and have common law rights in certain trademarks.
We own U.S. registrations for many our trademarks, trade names and designs, including such marks as Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, and Ranger. Additional trademarks, trade names and designs are the subject of pending federal applications for registration. We also use and have common law rights in certain trademarks.
These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in a delay, non-delivery, recall, or destruction of inventory shipments during key seasons, a loss of advance orders from wholesale customers or in other financial penalties.
These requirements could result in greater expense associated with compliance efforts, and failure to comply with these regulations could result in delay, non-delivery, recall, or destruction of inventory shipments during key seasons, a loss of advance orders from wholesale customers or in other financial penalties.
A majority of our products are produced outside the continental U.S. where we are subject to the risks of international commerc e and other international conditions . The majority of our products are produced in China, the Dominican Republic, Puerto Rico, Vietnam, India, and Mexico.
A majority of our products are produced outside the continental U.S. where we are subject to the risks of international commerc e and other international conditions . The majority of our products are produced in Vietnam, China, the Dominican Republic, Cambodia, Puerto Rico, India, and Mexico.
Our e-Commerce and third-party marketplace platforms pose numerous risks that could have an impact on our results of operations including: ● unanticipated operating problems such as computer viruses, electronic data theft and other disruptions; ● reliance on third-party software and service providers; ● continual investment in technology and cyber security; ● our ability to adapt and change to the ever-changing consumer buying habits through customer-facing technology, including mobile technology solutions that function, and provide a convenient and consistent experience for consumers; ● exposure to potential liability for online content; and ● increased competition among other e-Commerce vendors.
Our e-commerce and third-party marketplace platforms pose numerous risks that could have an impact on our results of operations including: ● unanticipated operating problems such as computer viruses, electronic data theft and other disruptions; ● reliance on third-party software and service providers; ● continual investment in technology and cybersecurity; ● our ability to adapt and change to the ever-changing consumer buying habits through customer-facing technology, including mobile technology solutions that function, and provide a convenient and consistent experience for consumers; ● exposure to potential liability for online content; and ● increased competition among other e-commerce vendors.
Our business could suffer if our third-party manufacturers violate labor, environmental or other applicable laws or fail to conform to generally accepted ethical standards. We require our third-party manufacturers to meet our standards for working conditions and other matters before we are willing to place business with them. As a result, we may not always obtain the lowest cost production.
Our business could suffer if our third-party manufacturers violate labor, environmental or other applicable laws or fail to conform to generally accepted ethical standards. We require our third-party manufacturers to meet our standards for working conditions and other matters before we are willing to do business with them. As a result, we may not always obtain the lowest cost production.
In addition, such actions by a manufacturer could result in negative publicity and may damage our reputation and the value of our brand and discourage retail customers and consumers from buying our products. 10 Table of Contents The growth of our business will be dependent upon the availability of adequate capital.
In addition, such actions by a manufacturer could result in negative publicity and may damage our reputation and the value of our brand and discourage retail customers and consumers from buying our products. 9 Table of Contents The growth of our business will be dependent upon the availability of adequate capital.
Despite the security measures we have in place, our facilities and systems and those of our third-party service providers, may be vulnerable to cyber-security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.
Despite the security measures we have in place, our facilities and systems and those of our third-party service providers, may be vulnerable to cybersecurity breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events.
Changes in the amounts and frequency of share repurchases or dividends also could adversely affect the value of our common stock. Disruption of our information technology systems and e-Commerce platforms could adversely affect our business Our information technology systems and-e-Commerce platforms are critical to our business operations.
Changes in the amounts and frequency of share repurchases or dividends also could adversely affect the value of our common stock. 12 Table of Contents Disruption of our information technology systems and e-commerce platforms could adversely affect our business Our information technology systems and e-commerce platforms are critical to our business operations.
Many factors affect the level of consumer spending in the footwear industry, including: ● general business conditions; ● interest rates; ● the availability of consumer credit; ● weather; ● increases in prices of nondiscretionary goods; ● taxation; and ● consumer confidence in future economic conditions.
Many factors affect the level of consumer spending in the footwear industry, including: ● general business conditions; ● interest rates; ● the availability of consumer credit; 11 Table of Contents ● weather; ● increases in prices of nondiscretionary goods; ● taxation; and ● consumer confidence in future economic conditions.
Therefore, our business is subject to certain risks of doing business offshore including: ● the imposition of additional U.S. legislation and regulations relating to imports, including quotas, duties, tariffs, taxes or other charges or restrictions, including recent tariffs on goods from China; ● foreign governmental regulation and taxation, including tariffs, import and export controls and other non-tariff barriers; ● fluctuations in foreign exchange rates; ● changes in economic conditions, including expropriation and nationalization; ● transportation conditions and costs in the Pacific and Caribbean; ● changes in the political stability of these countries; ● labor disputes and other work stoppages or interruptions; 9 Table of Contents ● changes in relationships between the U.S. and these countries; and ● the occurrence of contagious disease or illness.
Therefore, our business is subject to certain risks of doing business offshore including: ● the imposition of additional U.S. legislation and regulations relating to imports, including quotas, duties, tariffs, taxes or other charges or restrictions, including recent worldwide tariffs on goods under the Trade Act of 1974; ● foreign governmental regulation and taxation, including tariffs, import and export controls and other non-tariff barriers; ● fluctuations in foreign exchange rates; ● changes in economic conditions, including expropriation and nationalization; ● transportation conditions and costs in the Pacific and Caribbean; ● changes in the political stability of these countries; ● labor disputes and other work stoppages or interruptions; 8 Table of Contents ● changes in relationships between the U.S. and these countries; and ● the occurrence of contagious disease or illness.
Certain of our larger wholesale customers may develop, and in certain cases have developed, products under their own brands that compete with our branded products.
Certain of our larger wholesale customers may develop and manufacture competing products under their own brands and reduce purchases of our branded products . Certain of our larger wholesale customers may develop, and in certain cases have developed, products under their own brands that compete with our branded products.
Factors such as new tariffs proposed by the U.S. in various international markets, including China, shipping disruptions in the Red Sea, uncertainties related to the political environment in China, and ongoing conflicts such as the war between Russia and Ukraine have adversely affected the global economy and contributed to geopolitical instability.
Factors such as new global tariffs imposed by the U.S., uncertainties related to the political environment in China, and ongoing conflicts such as the war between Russia and Ukraine have adversely affected the global economy and contributed to geopolitical instability.
A cyber-security breach could have a material adverse effect on our business and reputation . We rely heavily on digital technologies for the successful operation of our business, including electronic messaging, digital marketing efforts and the collection and retention of customer data and employee information.
We rely heavily on digital technologies for the successful operation of our business, including electronic messaging, digital marketing efforts and the collection and retention of customer data and employee information.
The market price and volume of our common stock have been, and may continue to be, subject to significant fluctuations.
There are risks, including stock market volatility, inherent in owning our common stock. The market price and volume of our common stock have been, and may continue to be, subject to significant fluctuations.
Any loss of one of these key customers, the financial collapse or bankruptcy of one of these customers, or a significant reduction in purchases from one of these customers could result in a significant decline in sales, write-downs of excess inventory, or increased discounts to our customers, any of which could have a material adverse effect on our financial condition or results of operations. 11 Table of Contents Certain of our larger wholesale customers may develop and manufacture competing products under their own brands and reduce purchases of our branded products .
Any loss of one of these key customers, the financial collapse or bankruptcy of one of these customers, or a significant reduction in purchases from one of these customers could result in a significant decline in sales, write-downs of excess inventory, or increased discounts to our customers, any of which could have a material adverse effect on our financial condition or results of operations.
We rely on our distribution centers in Ohio and Nevada and manufacturing facilities in the Dominican Republic, Puerto Rico, and China and if there is a natural disaster or other serious disruption at any of these facilit ies , we may be unable to deliver merchandise effectively to our retailers and consumers.
There can be no assurance that the costs of products that continue to be manufactured by us can remain competitive with products sourced from third parties. 10 Table of Contents We rely on our distribution centers in Ohio and Nevada and manufacturing facilities in the Dominican Republic, Puerto Rico, and China and if there is a natural disaster or other serious disruption at any of these facilit ies , we may be unable to deliver merchandise effectively to our retailers and consumers.
Holders of our common stock are only entitled to receive such cash dividends as our Board of Directors may declare out of funds legally available for such payments. 12 Table of Contents Industry Risks Because the footwear market is sensitive to decreased consumer spending and slow economic cycles, if general economic conditions deteriorate, many of our customers may significantly reduce their purchases from us or may not be able to pay for our products in a timely manner.
Industry Risks Because the footwear market is sensitive to decreased consumer spending and slow economic cycles, if general economic conditions deteriorate, many of our customers may significantly reduce their purchases from us or may not be able to pay for our products in a timely manner.
Remote work could also introduce operational risk such as, but not limited to, cyber security risks. 13 Table of Contents We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may have an adverse effect on our business, financial condition results of operations We are in the process of completing a multi-year implementation of a complex new enterprise resource planning system (“ERP”).
We are implementing a new enterprise resource planning system, and challenges with the implementation of the system may have an adverse effect on our business, financial condition results of operations We are in the process of completing a multi-year implementation of a complex new enterprise resource planning system (“ERP”).
Although we have paid dividends to our shareholders, we have no obligation to continue doing so and may change our dividend policy at any time without notice to our shareholders. Our ABL Facility and Term Facility (as such terms defined in Note 10 - Long-Term Debt of our Consolidated Financial Statements) also contain restrictions on the amount of dividend payments.
Although we have paid dividends to our shareholders, we have no obligation to continue doing so and may change our dividend policy at any time without notice to our shareholders.
Some of our employees are working remotely which could strain our information technology systems and impact business continuity plans.
Some of our employees are working remotely which could strain our information technology systems and impact business continuity plans. Remote work could also introduce operational risk such as, but not limited to, cybersecurity risks. A cybersecurity breach could have a material adverse effect on our business and reputation .
We have entered into employment agreements with several executive officers and key employees, and also offer compensation packages designed to attract and retain talent. 14 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
We have entered into employment agreements with several executive officers and key employees, and also offer compensation packages designed to attract and retain talent. We may use artificial intelligence in our business, which could result in reputational harm, competitive harm, and legal liability, and adversely affect our business, results of operations and financial condition.
General Risk Factors Changes to U.S. tax, tariff and import/export regulations may have a negative effect on global economic conditions, financial markets and our business. The current political climate has introduced greater uncertainty with respect to trade policies, tariffs and government regulations affecting trade between the U.S. and other countries.
General Risk Factors Changes to U.S. tax, tariff and import/export regulations may have a negative effect on global economic conditions, financial markets and our business. We source products from manufacturers outside the U.S., primarily Vietnam, China, the Dominican Republic, Cambodia, Puerto Rico, India, and Mexico . In addition, we have manufacturing facilities in China and the Dominican Republic.
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There can be no assurance that the costs of products that continue to be manufactured by us can remain competitive with products sourced from third parties.
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Our ABL Facility and Term Facility (as such terms are defined in Note 7 - Long-Term Debt of our Consolidated Financial Statements) also contain restrictions on the amount of dividend payments. Holders of our common stock are only entitled to receive such cash dividends as our Board of Directors may declare out of funds legally available for such payments.
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We source products from manufacturers located outside of the U.S., primarily in China, Vietnam, the Dominican Republic, India, and Mexico.
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During the year ended December 31, 2025, pursuant to the International Emergency Economic Powers Act ("IEEPA"), the U.S. government announced significant additional tariffs on products imported from various countries, including those countries where we primarily source our products. In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the IEEPA were unlawful.
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Major developments in tax policy or trade relations, such as the disallowance of tax deductions for imported products or the imposition of unilateral tariffs on imported products, could have a material adverse effect on our business, results of operations and liquidity. There are risks, including stock market volatility, inherent in owning our common stock.
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Following the Supreme Court's decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs.
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Our products are subject to increasingly stringent and complex domestic and foreign product labeling, performance, environmental and safety standards, laws and other regulations, including those pertaining to perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other environmental impacts.
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There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether additional tariffs or other retaliatory actions may be imposed, modified, or suspended.
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These and future changes in tariffs, trade policies, trade actions, or retaliatory trade measures in response, have resulted and may continue to result in additional costs and pricing pressures, supply chain disruptions, volatile or unpredictable customer spending patterns, and increased economic or geopolitical risks, which could adversely impact the Company's future sales, business, financial condition, and results of operations, materially or in ways that we cannot predict.
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We may leverage artificial intelligence, including generative artificial intelligence and machine learning, to support our business operations. We may also use products and services from third parties that use integrated artificial intelligence technology.
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Our competitors or other third parties may incorporate artificial intelligence into their operational processes more quickly or more successfully than us, which could have a material adverse effect on our competitive position, reputation and operations.
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In addition, there are significant risks involved in developing and deploying artificial intelligence and there can be no assurance that the usage of artificial intelligence will be beneficial to our business, including our efficiency or profitability.
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The legal, regulatory and compliance environments surrounding the design and use of artificial intelligence technology - involving federal, state and foreign regulators - are evolving and complex. Our obligation to comply with the evolving regulatory landscape could entail significant costs and negatively affect our business.
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In addition, there has been a significant increase in artificial intelligence-related litigation and government regulatory actions targeting the design, deployment and other uses of artificial intelligence, and claiming liability under numerous areas of the law, such as consumer protection, product liability, privacy, intellectual property, securities and defamation.
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Any of these risks could have an adverse effect on our results of operations, financial condition, business and reputation. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Our Board of Directors has established governance protocol over risk management, including general oversight of information technology security and cybersecurity risk. The Audit Committee is central to the Board’s oversight of cybersecurity risks and is primarily responsible for this domain. The Audit Committee actively participates in discussions with management, external experts and amongst themselves regarding cybersecurity risks.
Biggest changeThe Audit Committee is central to the Board’s oversight of cybersecurity risks and is primarily responsible for this domain. The Audit Committee actively participates in discussions with management, external experts and amongst themselves regarding cybersecurity risks.
This platform is administered across our departments by our cybersecurity team led by our Vice President of Information Technology. Our information security programs and policies are aligned with those of the Center for Internet Security (CIS), Control Objectives for Information Technologies (COBIT), and National Institute of Standards Technology (NIST).
This platform is administered across our departments by our cybersecurity team led by our Vice President of Information Technology. Our information security programs and policies are aligned with those of the Center for Internet Security (CIS), Control Objectives for Information Technologies (COBIT), and the National Institute of Standards Technology (NIST) Cyber Security Framework (CSF).
Our Vice President of Information Technology has more than 35 years working as an IT professional, 13 years of which has been at the Company in various roles such as, Programming, Business Analysis, Systems Analysis, Operations, EDI Manager, and Applications Director. 15 Table of Contents
Our Vice President of Information Technology has more than 35 years working as an IT professional, 14 years of which has been at the Company in various roles such as, Programming, Business Analysis, Systems Analysis, Operations, EDI Manager, and Applications Director.
Although no cybersecurity incidents during the year ended December 31, 2024 which had a material impact on our business strategy, results of operations or financial condition, the scope and impact of any future incident cannot be predicted. See Item 1A. - Risk Factors for more information about our information security and cybersecurity risks.
Although no cybersecurity incidents occurred during the year ended December 31, 2025 that had a material impact on our business strategy, results of operations, or financial condition, the scope and impact of any future incident cannot be predicted.
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See Item 1A. - Risk Factors for more information about our information security and cybersecurity risks. 14 Table of Contents Governance Our Board of Directors has established governance protocol over risk management, including general oversight of information technology security and cybersecurity risk.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following locations represent our major properties by segment: Wholesale: Nelsonville, Ohio; Logan, Ohio; Chuzhou, China; Reno, Nevada; Puerto Rico; Dominican Republic Retail: Nelsonville, Ohio; Logan, Ohio; Chuzhou, China; Reno, Nevada Contract Manufacturing: Nelsonville, Ohio; Logan, Ohio; Reno, Nevada; Puerto Rico; Dominican Republic
Biggest changeThe following locations represent our major properties by segment: Wholesale: Nelsonville, Ohio; Logan, Ohio; Chuzhou, China; Reno, Nevada; Puerto Rico; Dominican Republic Retail: Nelsonville, Ohio; Logan, Ohio; Chuzhou, China; Reno, Nevada; Puerto Rico; Dominican Republic Contract Manufacturing: Nelsonville, Ohio; Chuzhou, China; Reno, Nevada; Puerto Rico
ITEM 2. PROPERTIES . We own or lease various properties in domestic and foreign locations. Our principal properties include our corporate offices, manufacturing facilities, distribution centers and our retail outlet store. Our administrative, sales, and marketing operations are generally performed from our owned facilities in Nelsonville, Ohio.
ITEM 2. PROPERTIES . We own or lease various properties in domestic and foreign locations. Our principal properties include our corporate offices, manufacturing facilities, distribution centers and our retail store. Our administrative, sales, and marketing operations are generally performed from our owned facilities in Nelsonville, Ohio.
We operate our manufacturing operations through our owned facility in Chuzhou, China as well as several leased facilities in Puerto Rico and the Dominican Republic. We operate our distribution operations through an owned facility in Logan, Ohio and a leased facility in Reno, Nevada. Our retail outlet store operates from an owned facility in Nelsonville, Ohio.
We operate our manufacturing operations through our owned facility in Chuzhou, China as well as several leased facilities in Puerto Rico and the Dominican Republic. We operate our distribution operations through an owned facility in Logan, Ohio and a leased facility in Reno, Nevada. Our retail store operates from an owned facility in Nelsonville, Ohio.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeA disc ussion of legal matters is f ound in Note 20 - Commitments and Contingencies of our Consolidated Financial Statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Biggest changeA disc ussion of legal matters is f ound in Note 17 - Commitments and Contingencies of our Consolidated Financial Statements included in Part II - Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare Repurchases On February 24, 2025, Rocky Brands announced that its board of directors has approved a new share repurchase program of up to $7,500,000 of the Company’s outstanding common stock, no par value per share.
Biggest changeShare Repurchases On February 24, 2026, Rocky Brands announced that its board of directors approved a new share repurchase program of up to $7,500,000 of the Company’s outstanding common stock, no par value per share, which has a one year duration.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock trades on the NASDAQ Global Select Market under the symbol "RCKY." As of February 28, 2025, there were 65 shareholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock trades on the NASDAQ Global Select Market under the symbol "RCKY." As of February 27, 2026, there were 64 shareholders of record of our common stock.
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This repurchase program replaces the previous repurchase program authorized by the board of directors that expired on March 4, 2022. 17 Table of Contents Performance Graph The following performance graph compares our cumulative shareholder return on our common shares with the NASDAQ Composite Index and the Standard & Poor's Footwear Index, which is a published industry index.
Added
This repurchase program replaces the previous repurchase program authorized by the board of directors that expired on February 24, 2026.
Removed
The comparison of the cumulative total return to shareholders for each of the periods assumes that $100 was invested in our common stock on December 31, 2019 and in the NASDAQ Stock Market (U.S.) Index and the Standard & Poor's Footwear Index and that all dividends were reinvested.
Added
A summary of our repurchases of common stock for the quarter ended December 31, 2025 is as follows: Period Total Number of Shares (or Units) Purchased (1) Average Price Paid Per Share (or Unit) Approximate Dollar Value of Maximum Number of Shares that May Yet be Purchased Under Plans or Programs (2) October 1, 2025 - October 31, 2025 - - $ 7,299,140 November 1, 2025 - November 30, 2025 - - 7,299,140 December 1, 2025 - December 31, 2025 - - 7,299,140 Total - - $ 7,299,140 (1) There were no shares repurchased under the Company's share repurchase program during the three months ended December 31, 2025.
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This comparison includes the period ended December 31, 2019 through the period ended December 31, 2024 . ITEM 6. [RESERVED]
Added
(2) The number shown represents, as of the end of each period, the maximum number of shares (approximate dollar value) of Common Stock that may yet be purchased under publicly announced stock repurchase authorizations. The shares may be purchased, from time-to-time, depending on market conditions.
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On February 25, 2025, Rocky Brands announced a $7,500,000 share repurchase plan that expired on February 24, 2026. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeHowever, we have seen improvements in transit lead times and related freight costs compared to the prior period, which have had a positive impact on the results of our operations through 2024. 2024 FINANCIAL OVERVIEW ● Net sales decreased 1.7% to $453.8 million in 2024 compared to 2023; ● Gross margin increased 70 basis points to 39.4% of net sales in 2024 versus 38.7% of net sales in 2023; ● Income from operations in 2024 compared to 2023 decreased 12.1% to $31.1 million; ● Interest expense decreased 19.8% to $17.0 million in 2024 over 2023; 19 Table of Contents ● Net income increased 9.6% to $11.4 million, or $1.52 per diluted share in 2024 compared to $10.4 million, or $1.41 per diluted share in 2023; ● Total debt, net of debt issuance costs, decreased 25.7% to $128.7 million at December 31, 2024 compared to $173.1 million at December 31, 2023; and ● Inventory decreased 1.5% to $166.7 million at December 31, 2024 compared to $169.2 million at December 31, 2023.
Biggest changeProposed or enacted tariffs and changes to U.S. trading policies may be restituted, paused, removed, or changed at any time and to the extent we are unable to successfully mitigate any negative impacts it could adversely affect our business, financial condition and results of operation. 2025 FINANCIAL OVERVIEW ● Net sales increased 6.2% to $482.0 million compared to 2024; ● Gross margin increased 150-basis points to 40.9% of net sales in 2025 compared to 39.4% of net sales in 2024; ● Income from operations increased 19.7% to $37.2 million in 2025 compared to $31.1 million in 2024; ● Net income increased 95.6% to $22.3 million, or $2.96 per diluted share, in 2025, compared to $11.4 million, or $1.52 per diluted share, in 2024; and 17 Table of Contents ● Total debt on December 31, 2025 was $122.6 million, down 4.7%, compared to $128.7 million at December 31, 2024.
Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitations, dependence on sales forecasts, changes in consumer demand, seasonality, impact of weather, competition, reliance on suppliers, risks inherent to international trade, changing retail trends, the loss or disruption of our manufacturing and distribution operations, cyber security breaches or disruption of our digital systems, fluctuations in foreign currency exchange rates, economic changes, as well as other factors set forth under the caption "Item 1A.
Investors are cautioned that all forward-looking statements involve risk and uncertainties including, without limitations, dependence on sales forecasts, changes in consumer demand, seasonality, impact of weather, competition, reliance on suppliers, risks inherent to international trade, changing retail trends, the loss or disruption of our manufacturing and distribution operations, cybersecurity breaches or disruption of our digital systems, fluctuations in foreign currency exchange rates, economic changes, as well as other factors set forth under the caption "Item 1A.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") describes the matters that we consider to be important to understanding the results of our operations for each of the two years in the period ended December 31, 2024 and 2023 , and our capital resources and liquidity as of December 31, 2024 and 2023 .
This Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") describes the matters that we consider to be important to understanding the results of our operations for each of the two years in the period ended December 31, 2025 and 2024 , and our capital resources and liquidity as of December 31, 2025 and 2024 .
During the second quarter of 2024, we amended and restated our Original ABL Facility (as such term is defined in Note 10 - Long-Term Debt of our Consolidated Financial Statements) which resulted in a restated $175.0 million revolving credit facility and a new $50.0 million term facility.
During the second quarter of 2024, we amended and restated our Original ABL Facility (as such term is defined in Note 7 - Long-Term Debt of our Consolidated Financial Statements) which resulted in a restated $175.0 million revolving credit facility and a new $50.0 million term facility.
State, local or foreign jurisdictions may enact tax laws that could result in further changes to taxation and materially affect our financial position and results of operations. 24 Table of Contents On an interim basis, we estimate the annual effective tax rate and record a quarterly income tax provision in accordance with the projected annual rate.
State, local or foreign jurisdictions may enact tax laws that could result in further changes to taxation and materially affect our financial position and results of operations. On an interim basis, we estimate the annual effective tax rate and record a quarterly income tax provision in accordance with the projected annual rate.
See Note 17 - Revenue of our Consolidated Financial Statements for additional information. Inventories Inventories are stated at the lower of cost or net realizable value, on a first-in, first-out basis.
See Note 14 - Revenue of our Consolidated Financial Statements for additional information. Inventories Inventories are stated at the lower of cost or net realizable value, on a first-in, first-out basis.
For the discussion of the changes in our results of operations and statement of cash flows between the years ended December 31, 2023 and December 31, 2022 , refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2023 , filed with the SEC on March 15, 2024, which is available on the SEC's website at https://www.sec.gov/edgar/search/ and our corporate website at www.rockybrands.com .
For the discussion of the changes in our results of operations and statement of cash flows between the years ended December 31, 2024 and December 31, 2023 , refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", of our Annual Report on Form 10-K for the year ended December 31, 2024 , filed with the SEC on March 17, 2025, which is available on the SEC's website at https://www.sec.gov/edgar/search/ and our corporate website at www.rockybrands.com .
The increase in inventory purchases also led to increased inventory in-transit at December 31, 2024 versus the year ago period and associated accrued duties and in-bound freight, which are included in accrued expenses and other liabilities on the Consolidated Balances Sheets at December 31, 2024 and 2023.
The increase in inventory purchases also led to increased inventory in-transit at December 31, 2024 versus the year ago period and associated accrued duties and in-bound freight, which are included in accrued expenses and other liabilities on the Consolidated Balances Sheets at December 31, 2024. Investing Activities.
If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net revenue and earnings in the period such variances become known. Our estimated sales returns are based on historical customer return data and known or anticipated returns not yet received from customers.
If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net revenue and earnings in the period such variances become known. 21 Table of Contents Our estimated sales returns are based on historical customer return data and known or anticipated returns not yet received from customers.
See Note 10 - Long-Term Debt and Note 11 - Leases to the Consolidated Financial Statement for more information. Based on our current expectations and forecasts of future earnings, we believe our cash generated from operations will provide sufficient liquidity to fund our operations and debt and lease obligations for the next twelve months and beyond.
See Note 7 - Long-Term Debt and Note 8 - Leases to the Consolidated Financial Statement for more information. Based on our current expectations and forecasts of future earnings, we believe our cash generated from operations will provide sufficient liquidity to fund our operations and debt and lease obligations for the next twelve months and beyond.
Future minimum lease payments under non-cancelable operating leases are outlined in further detail in Note 11 - Leases of our Consolidated Financial Statements. 22 Table of Contents As of December 31, 2024, our material cash requirements from known contractual obligations and commitments relate primarily to our long-term debt and operating leases commitments.
Future minimum lease payments under non-cancelable operating leases are outlined in further detail in Note 8 - Leases of our Consolidated Financial Statements. 20 Table of Contents As of December 31, 2025, our material cash requirements from known contractual obligations and commitments relate primarily to our long-term debt and operating leases commitments.
F or additional information regarding this share repurchase p rogram, see Note 14 - Shareholder's Equity of our Consolidated Financial Statements. We are contingently liable with respect to lawsuits, taxes and various other matters that routinely arise in the normal course of business.
F or additional information regarding this share repurchase p rogram, see Note 18 - Subsequent Events of our Consolidated Financial Statements. We are contingently liable with respect to lawsuits, taxes and various other matters that routinely arise in the normal course of business.
Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities. Our working capital consists primarily of trade receivables and inventory, offset by short-term debt and accounts payable.
Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities. Our working capital consists primarily of trade receivables and inventory, offset by accounts payable and accrued liabilities.
Our positive cash flow in 2024 was offset by cash used in investing and financing activities of $3.0 million and $50.6 million, respectively, resulting in an overall decrease in cash of approximately $0.8 million in 2024.
Our positive cash flow in 2025 was offset by cash used in investing and financing activities of $6.3 million and $10.9 million, respectively, resulting in an overall decrease in cash of approximately $0.8 million in 2025.
Net c ash provided by operating activities for the year ended December 31, 2024 was $52.8 million compared to $73.6 million for the year ended December 31, 2023 . Adjusting for non-cash items, net income provided a cash in-flow of $35.5 million and $22.3 million for the years ended December 31, 2024 and 2023 , respectively.
Net c ash provided by operating activities for the year ended December 31, 2025 was $16.3 million compared to $52.8 million for the year ended December 31, 2024 . Adjusting for non-cash items, net income provided a cash in-flow of $40.3 million and $35.5 million for the years ended December 31, 2025 and 2024 , respectively.
Cash used in financing activities for the twelve months ended December 31, 2024 and 2023 was primarily related to payments on our revolving credit facility and term loan. On February 24, 2025, we announced our new $7,500,000 share repurchase program.
Cash used in financing activities for the twelve months ended December 31, 2025 and 2024 was primarily related to dividend payments and payments on our revolving credit facility and term loan. O n February 24, 2026, we announced our new $7,500,000 sha re repurchase program.
Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995" below.
Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under the caption "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995" below. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of the Company.
We believe that we have sufficient liquidity to support our ongoing operations and to re-invest in our business to drive future growth. As of December 31, 2024, we maintained cash and cash equivalents of $3.7 million and had $55.9 million of availability under our ABL Facility.
We believe that we have sufficient liquidity to support our ongoing operations and to re-invest in our business to drive future growth. As of December 31, 2025, we maintained cash and cash equivalents of $2.9 million and had $39.5 million of availability under our ABL Facility.
During the twelve months ended December 31, 2024, we reported a decline in net sales compared to the year ended December 31, 2023, which was attributable to a decline in sales in our Wholesale reporting segment, partially offset by increases in sales in our Retail and Contract Manufacturing reporting segments.
During the twelve months ended December 31, 2025, we reported an increase in net sales compared to the twelve months ended December 31, 2024, which was attributable to an increase in net sales in our Wholesale and Retail reporting segments, partially offset by a decrease in net sales in our Contract Manufacturing reporting segment.
The following table presents the key categories of our Consolidated Statement of Cash Flows: Twelve Months Ended December 31, ($ in millions) 2024 2023 Operating activities $ 52.8 $ 73.6 Investing activities (3.0 ) 13.4 Financing activities (50.6 ) (88.2 ) Net change in cash and cash equivalents $ (0.8 ) $ (1.2 ) Operating Activities.
The following table presents the key categories of our Consolidated Statement of Cash Flows: Twelve Months Ended December 31, ($ in millions) 2025 2024 Operating activities $ 16.3 $ 52.8 Investing activities (6.2 ) (3.0 ) Financing activities (10.9 ) (50.6 ) Net change in cash and cash equivalents $ (0.8 ) $ (0.8 ) Operating Activities.
In addition to our ABL Facility with outstanding borrowings of $95.9 million as of December 31, 2024, we also have a Term Facility with outstanding borrowings of $35.1 million as of December 31, 2024. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the agreement.
In addition to our ABL Facility with outstanding borrowings of $97.6 million as of December 31, 2025, we also have a Term Facility with outstanding borrowings of $26.8 million as of December 31, 2025. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the agreement.
The debt refinance resulted in $1.1 million loss on term loan extinguishment charge and a $1.5 million prepayment penalty which are included within Interest Expense and Other - net within the Consolidated Statements of Operations for the twelve months ended December 31, 2024. See Note 10 - Long-Term Debt of our Consolidated Financial Statement for more information.
The debt refinance that occurred in April 2024 resulted in a $1.1 million loss on term loan extinguishment charge and a $1.5 million prepayment penalty which are included within Interest Expense and Other - net within the Consolidated Statements of Operations for the twelve months ended December 31, 2024.
The net change in working capital and other assets and liabilities resulted in an increase to cash provided by operating activities of $17.2 million for the year ended December 31, 2024 , compared to an increase of $51.3 million for the year ended December 31, 2023 .
The net change in working capital and other assets and liabilitie s resulted in a decrease to cash provided by operating activities of $24.0 million for the year ended December 31, 2025 , compared to an increase of $17.2 million for the year ended December 31, 2024 .
Failure to gain market acceptance for new products that we introduce could impede our growth, reduce our profits, adversely affect the image of our brands, erode our competitive position, and result in long term harm to our business.
Failure to gain market acceptance for new products that we introduce could impede our growth, reduce our profits, adversely affect the image of our brands, erode our competitive position, and result in long term harm to our business. Our business is subject to a highly evolving and everchanging macroeconomic environment, including changes in tariffs, taxes, and industry changes.
Twelve Months Ended December 31, ($ in thousands) 2024 2023 Inc./ (Dec.) Inc./ (Dec.) INCOME TAXES: Income Tax Expense $ 2,671 $ 3,728 $ (1,057 ) (28.4 )% Effective Tax Rate 19.0 % 26.3 % (7.3 )% The effective tax rate for the twelve months ended December 31, 2024 was 19.0% compared to 26.3% for the twelve months ended December 31, 2023.
Twelve Months Ended December 31, ($ in thousands) 2025 2024 Inc./ (Dec.) Inc./ (Dec.) INCOME TAXES: Income Tax Expense $ 4,906 $ 2,671 $ 2,235 83.7 % Effective Tax Rate 18.1 % 19.0 % (0.9 )% The effective tax rate for the twelve months ended December 31, 2025 was 18.1% compared to 19.0% for the twelve months ended December 31, 2024.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This report, including Management’s Discussion and Analysis of Financial Conditions and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbors created thereby.
To the extent the adoption of new accounting standards materially affects financial condition, results of operations, or liquidity, the impacts are discussed in the applicable section of this MD&A and the Notes to Consolidated Financial Statements. 22 Table of Contents SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This report, including Management’s Discussion and Analysis of Financial Conditions and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which are intended to be covered by the safe harbors created thereby.
Elements of variable consideration including discounts and allowances and rebates are determined at contract inception and are reassessed at each reporting date, at a minimum, to reflect any change in the types of variable consideration offered to the customer.
These reserves are based on the amounts earned, or to be claimed, on the related sales of our products. Elements of variable consideration including discounts and allowances and rebates are determined at contract inception and are reassessed at each reporting date, at a minimum, to reflect any change in the types of variable consideration offered to the customer.
Income taxes We are subject to taxation in the United States, as well as various state and foreign jurisdictions. The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our interpretation of tax laws, regulations and policies could differ from how standard setting-bodies interpret them.
The determination of our provision for income taxes requires significant judgment, the use of estimates and the interpretation and application of complex tax laws. Our interpretation of tax laws, regulations and policies could differ from how standard setting-bodies interpret them.
This method requires us to estimate the future revenues for the related brands, the appropriate royalty rate, and the weighted average cost of capital. We did not recognize any impairment charges for goodwill during fiscal year 2024 or 2023. During the fourth quarter of 2024, we recognized a $4.0 million impairment charge for the Muck trademark.
This method requires us to estimate the future revenues for the related brands, the appropriate royalty rate, and the weighted average cost of capital. We did not recognize any impairment charges for goodwill during fiscal year 2025 or 2024. No impairment charges were recognized for the Company’s indefinite-lived intangible assets during fiscal year 2025.
Gross margin in 2024 was 39.4% compared to 38.7% in 2023. The increase in gross margin was attributed to an increase in both Wholesale and Contract Manufacturing gross margin as well as a higher mix of Retail segment net sales, which carry higher margins than our Wholesale and Contract Manufacturing segments.
The 150-basis point increase in gross margin to 40.9% of net sales in 2025 compared to 39.4% of net sales in 2024 was primarily driven by an 170-basis point increase in our Wholesale gross margin as well as a higher mix of Retail segment sales which carry higher gross margins than our Wholesale and Contract Manufacturing segments, partially offset by higher tariffs and a decrease in Contract Manufacturing gross margins.
("U.S. GAAP"), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of the Company's Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP"), requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates these estimates.
Our Retail business includes direct sales of our products to consumers through our business-to-business web platform, e-Commerce websites, third-party marketplaces and our Rocky Outdoor Gear Store. Our Contract Manufacturing segment includes sales to the U.S. Military, private label sales and any sales to customers in which we are contracted to manufacture or source a specific footwear product for a customer.
Our Contract Manufacturing segment includes sales to the U.S. Military, private label sales and any sales to customers in which we are contracted to manufacture or source a specific footwear product for a customer.
Analysis of Results of Operations The following table sets forth Consolidated Statements of Operations data as percentages of total net sales: Twelve Months Ended December 31, ($ in thousands) 2024 2023 NET SALES: $ 453,772 $ 461,833 Cost of goods sold 274,762 283,235 Gross margin 179,010 178,598 Operating expenses 147,944 143,226 Income from operations $ 31,066 $ 35,372 Net sales decreased $8.1 million or 1.7% for the twelve months ended December 31, 2024, due to a decrease in Wholesale net sales, partially offset by an increase in Retail and Contract Manufacturing net sales.
Analysis of Results of Operations The following table sets forth a summary of the Consolidated Statements of Operations: Twelve Months Ended December 31, ($ in thousands) 2025 2024 Net sales $ 481,976 $ 453,772 Cost of goods sold 284,686 274,762 Gross margin 197,290 179,010 Operating expenses 160,103 147,944 Income from operations $ 37,187 $ 31,066 Net sales increased approximately $28.2 million, or 6.2%, for the twelve months ended December 31, 2025, due to an increase in Wholesale and Retail net sales, partially offset by a decrease in Contract Manufacturing net sales.
The performance obligation is satisfied, and revenue is recorded when control passes to the customer which is generally upon shipment to the customer or at the time of sale for our retail store customers. Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of our products, which is the net sales price.
The performance obligation is satisfied, and revenue is recorded when control passes to the customer which is generally upon shipment to the customer or at the time of sale for our outdoor gear store customers.
Retail net sales for the twelve months ended December 31, 2024 increased due to growth in our Lehigh CustomFit Platform and our direct to consumer e-Commerce business.
Retail net sales for the twelve months ended December 31, 2025 increased $26.0 million or 20.5% compared to the twelve months ended December 31, 2024. The increase in Retail net sales was primarily due to growth in our direct-to-consumer business as well as our Lehigh CustomFit Platform.
The net sales price includes estimates of variable consideration for which reserves may be established. Components of variable consideration include discounts and allowances, customer rebates, markdowns, and product returns. These reserves are based on the amounts earned, or to be claimed, on the related sales of our products.
Revenue is measured as the amount of consideration we expect to receive in exchange for the transfer of our products, which is the net sales price. The net sales price includes estimates of variable consideration for which reserves may be established. Components of variable consideration include discounts and allowances, customer rebates, markdowns, and product returns.
We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities, also known as "Variable Interest Entities." Additionally, we do not have any related party transactions that materially affect the results of operations, cash flow or financial condition. 23 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of the Company's Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
See Note 17 - Commitments and Contingencies of our Consolidated Financial Statements for further discussion of legal matters. We do not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities, also known as "Variable Interest Entities." Additionally, we do not have any related party transactions that materially affect the results of operations, cash flow or financial condition.
The increase in net sales in our Lehigh CustomFit Platform was attributed to the completion of the realignment of our sales organization in the first quarter of 2024 which allowed us to expand our customer base and increase offerings to current customers.
The increase in our Lehigh CustomFit business was attributed to a realignment of our sales organization in the first quarter of 2024, which allowed us to expand our customer base, positioning Lehigh for long-term growth starting in the latter half of 2024.
Our Wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, catalogs, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers, and online retailers.
Our Wholesale channels vary by product line and include sporting goods stores, outdoor retailers, independent shoe retailers, hardware stores, mass merchants, uniform stores, farm store chains, specialty safety stores, specialty retailers, and online retailers. Our Retail business includes direct sales of our products to consumers through our business-to-business web platform, e-commerce websites, third-party marketplaces and our Rocky Outdoor Gear Store.
Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments. As of December 31, 2024, we were in compliance with the covenant and restrictions. We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity.
Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments and share repurchases. As of December 31, 2025, we were in compliance with the covenant and restrictions.
For the year ending December 31, 2023, our positive cash flow from operations was enhanced by a positive cash flow from investing activities of $13.4 million, offset by cash used in financing activities of $88.2 million, resulting in an overall decrease in cash of approximately $1.2 million in 2023.
For the year ended December 31, 2024, our positive cash flow in 2024 was offset by cash used in investing and financing activities of $3.0 million and $50.6 million, respectively, resulting in an overall decrease in cash of approximately $0.8 million.
As a part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands. Our products are distributed through three distinct business segments: Wholesale, Retail and Contract Manufacturing.
As a part of our strategy of outfitting consumers from head-to-toe, we market complementary branded apparel and accessories that we believe leverage the strength and positioning of each of our brands. 16 Table of Contents In our Wholesale business, we distribute our products through a wide range of distribution channels representing thousands of retail store locations in the U.S., the U.K. and other international markets such as Europe.
Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $48.00 for our value priced products to $655.00 for our premium products.
Accordingly, average inventory levels have been highest during the second and third quarters of each year and sales have been highest in the last two quarters of the year. Our footwear products incorporate varying features and are positioned across a range of suggested retail price points from $45.00 for our value priced products to $680.00 for our premium products.
As of December 31, 2024, cash and cash equivalents were approximately $3.7 million and our total indebtedness, net of debt issuance costs, was approximately $128.7 million, a reduction of $44.4 million, or 25.7%, over our indebtedness at December 31, 2023. Of total debt paydown, $21.7 million occurred in the fourth quarter of 2024.
As of December 31, 2025, cash and cash equivalents were approximately $2.9 million and our total indebtedness, net of debt issuance costs was approximately $122.6 million, a reduction of approximately 4.7%, or $6.1 million, from December 31, 2024. Total inventory increased 8.7% or $14.4 million from December 31, 2024 and was approximately $181.1 million at December 31, 2025.
In 2024 and 2023, our business generated a positive cash flow from operating activities of $52.8 million and $73.6 million, respectively. Generally, the cash provided from operations consists of changes in our working capital and is sufficient to fund operations in any given year.
Generally, the cash provided by operations consists of changes in our working capital and coupled with our ABL is sufficient to fund operations in any given year.
The increase in Contract Manufacturing net sales for the twelve months ended December 31, 2024 was due to a multi-year contract awarded with the U.S. Military.
The decrease in Contract Manufacturing net sales for the twelve months ended December 31, 2025 was mainly attributed to a decrease in sales to the U.S. Military as there were no new contracts awarded in 2025, partially offset by an increase in private label net sales.
See Note 7 - Goodwill and Other Intangible Assets of our Consolidated Financial Statements for additional information on the Muck trademark impairment.
Refer to Note 5 - Goodwill and Other Intangible Assets of our Consolidated Financial Statements for additional information on the Muck trademark impairment. Income taxes We are subject to taxation in the U.S., as well as various state and foreign jurisdictions.
The decrease in our effective tax rate was due to a return to provision adjustment resulting from foreign tax credits recognized in the fourth quarter of 2023. LIQUIDITY AND CAPITAL RESOURCES Overview Our principal sources of liquidity is our income from operations, as well as access to the borrowing capacity under our ABL Facility.
The decrease from the year ago period was primarily driven by the changes in state and local income taxes and other discrete tax benefits recognized in 2025. LIQUIDITY AND CAPITAL RESOURCES Overview Our principal source of liquidity is our income from operations, as well as access to the borrowing capacity under our ABL Facility.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of the Company. 18 Table of Contents BUSINESS OVERVIEW We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Muck, Rocky, Georgia Boot, Durango, Lehigh, XTRATUF, Ranger and the licensed brand Michelin.
BUSINESS OVERVIEW We are a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Muck, XTRATUF, Rocky, Durango, Georgia Boot, Lehigh, Ranger, and the licensed brand Michelin. Our portfolio of brands is organized into three reportable segments in which our product is distributed: Wholesale, Retail, and Contract Manufacturing.
During the year ended December 31, 2024, we paid down a total of $44.2 million in debt. Our capital expenditures relate primarily to investments in information technology, molds and equipment associated with our manufacturing and distribution operations, merchandising fixtures and projects related to our corporate offices.
We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity as well as repurchase shares of common stock under our share repurchase program. Our capital expenditures relate primarily to investments in information technology, molds and equipment associated with our manufacturing and distribution operations, merchandising fixtures and projects related to our corporate offices.
Operating expenses increased $4.7 million to 32.6% of net sales in 2024 compared to 31.0% of net sales in 2023. The increase in operating expenses was due to a $4.0 million impairment charge for the Muck trademark and an increase in outbound freight and other logistic costs associated with the increase in Retail sales.
The increase in operating expenses as a percentage of net sales was due to higher outbound logistics and other selling costs associated with the increase in Retail net sales, as well as an increase in discretionary spending.
Our Retail reporting segment carries higher gross margins than both our Wholesale and Contract Manufacturing Reporting segments. The increase was offset by a decrease in Retail gross margins as a percentage of net sales in 2024 compared to the prior year.
The 150-basis point improvement in gross margin was primarily driven by a 170-basis point increase in Wholesale gross margin as well as a higher mix of Retail segment sales which carry higher gross margins than Wholesale and Contract Manufacturing segments, partially offset by higher tariffs and a decrease in Contract Manufacturing gross margin. 18 Table of Contents Operating expenses increased $12.2 million to 33.2% of net sales in 2025 compared to 32.6% of net sales in 2024.
The charge is included within Operating Expenses within the Consolidated Statements of Operations for the twelve months ended December 31, 2024. No impairment charges were recognized for the Company’s indefinite-lived intangible assets during fiscal year 2023. Refer to Note 7 - Goodwill and Other Intangible Assets of our Consolidated Financial Statements for additional information on the Muck trademark impairment.
During the fourth quarter of 2024, we recognized a $4.0 million impairment charge for our Muck trademarks. The charge is included within Operating Expenses within the Consolidated Statements of Operations for the twelve months ended December 31, 2024.
During the year ended December 31, 2023 inventory decreased $60.0 million, which was attributed to a concentrated effort to optimize inventory levels during 2023. Investing Activities. Net c ash used in investing activities for the twelve months ended December 31, 2024 was primarily a result of purchases of fixed assets, specifically machinery and equipment.
Net cash used in investing activities for the twelve months ended December 31, 2025 and 2024 was primarily a result of purchases of fixed assets, specifically machinery and equipment and investments in information technology. Additionally, in 2025, we purchased land for the planned future expansion of our distribution center located in Logan, Ohio. Financing Activities.
We lease certain machinery, equipment, and manufacturing facilities under operating leases that generally provide for renewal options.
In 2025, we purchased land for the future expansion of our distribution center in Logan, Ohio and as such it is possible that a significant portion of future capital expenditures may relate to this expansion. We lease certain machinery, equipment, and manufacturing facilities under operating leases that generally provide for renewal options.
Contract Manufacturing gross margin as a percentage of net sales increased for the twelve months ended 2024 compared to 2023 due to increased sales with the U.S.
Contract Manufacturing gross margin for the twelve months ended December 31, 2025 was $0.6 million, or 4.8%, of net sales compared to $1.6 million, or 11.9%, of net sales. The decrease in gross margin as a percentage of net sales was due to reduced economies of scale at our Puerto Rico manufacturing facility.
Operating income decreased 12.1% to $31.1 million for the year ended December 31, 2024 compared to $35.4 million for the year ended December 31, 2023. The decrease in operating income was due to higher freight and logistics costs associated with higher Retail sales as well as higher marketing and other discretionary spending due to the pullback of spending in 2023.
The increase in operating expenses as a percentage of net sales was primarily due to an increase in outbound logistics and other selling costs associated with a higher volume of Retail sales in the current year period as well as an incremental increase in discretionary spending, including digital advertising.
Twelve Months Ended December 31, ($ in thousands) 2024 2023 Inc./ (Dec.) Inc./ (Dec.) INTEREST EXPENSE AND OTHER: Interest expense $ 16,119 $ 22,904 $ (6,785 ) (29.6 )% Loss on term loan extinguishment 1,111 - 1,111 (100.0 ) Other income, net (222 ) (345 ) 123 (35.7 ) Gain on sale of business - (1,341 ) 1,341 (100.0 )% Total Interest Expense and Other $ 17,008 $ 21,218 $ 4,210 (19.8 )% The decrease in interest expense was mainly attributed to lower interest rates achieved through our debt refinance completed in April 2024, as well as lower debt levels for the year ended December 31, 2024 compared to the year ago period .
The decrease in interest expense was mainly attributed to lower interest rates achieved through our debt refinance completed in April 2024, as well as lower debt levels for the year ended December 31, 2025 compared to the prior year period .
Retail gross margins as a percentage of net sales decreased for the twelve months ended December 31, 2024 compared to the same year ago period due to increased promotional efforts across all of our retail channels in order to optimize our inventory levels.
Our operating income as a percentage of net sales for the year ended December 31, 2025 was 7.7% of net sales compared to 6.8% of net sales for the year ended December 31, 2024.
Twelve Months Ended December 31, ($ in thousands) 2024 2023 Inc./ (Dec.) Inc./ (Dec.) NET SALES: Wholesale $ 313,340 $ 337,019 $ (23,679 ) (7.0 )% Retail 126,868 116,960 9,908 8.5 Contract Manufacturing 13,564 7,854 5,710 72.7 Total Net Sales $ 453,772 $ 461,833 $ (8,061 ) (1.7 )% 20 Table of Contents The decrease in Wholesale net sales for the twelve months ended December 31, 2024 was due to non-recurring sales that occurred during 2023 and are not expected to continue on an on-going basis.
The following information is presented on net sales for the years ended December 31, 2025 and 2024: Twelve Months Ended December 31, ($ in thousands) 2025 2024 Inc./ (Dec.) Inc./ (Dec.) NET SALES: Wholesale $ 316,561 $ 313,340 $ 3,221 1.0 % Retail 152,889 126,868 26,021 20.5 Contract Manufacturing 12,526 13,564 (1,038 ) (7.7 ) Total Net Sales $ 481,976 $ 453,772 $ 28,204 6.2 % Wholesale net sales increased approximately $3.2 million or 1.0% for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024.
Following the sale of the Servus brand in the first quarter of 2023, the Rock Island facility operations were underutilized, prompting our decision to close the facility during the third quarter of 2023. ECONOMIC CONDITIONS AND UNCERTAINTIES Our growth strategy is founded substantially on the expansion of our brands into new footwear and apparel markets.
While operating expenses were up slightly to the year ago period, we were able to significantly increase our bottom line as a result of interest expense and tax savings. ECONOMIC CONDITIONS AND UNCERTAINTIES Our growth strategy is founded substantially on the expansion of our brands into new footwear and apparel markets.
Interest expense decreased 19.8% in 2024 compared to 2023 due to lower debt levels and lower interest rates resulting from the debt refinance that closed in April 2024. Net income increased 9.6% to $11.4 million in 2024 from $10.4 million due to lower interest expense and lower tax expense in 2024 compared to that of 2023.
Net income increased 95.6% to $22.3 million for the twelve months ended December 31, 2025 compared to $11.4 million for the twelve months ended December 31, 2024, primarily due to higher gross margins, lower interest expense and a lower effective tax rate in 2025 compared to 2024.
Removed
Our brands have a long history of representing high quality, comfortable, functional, and durable footwear, and our products are organized around six target markets: work, outdoor, western, commercial military, duty and military.
Added
The reportable segments are targeted around six distinct product lines: work, outdoor, western, duty, commercial military, and military. We frequently experience significant seasonal fluctuations in our business as many of our footwear products and product lines are used by consumers in adverse weather conditions.
Removed
In our Wholesale business, we distribute our products through a wide range of distribution channels representing over 10,000 retail store locations in the U.S., the U.K. and other international markets such as Europe.
Added
Over the last two years, we have seen a shift in our total mix of sales, as the growth of our Retail segment continues to outpace the growth in our Wholesale and Contract Manufacturing segments.
Removed
See Note 10 - Long-Term Debt of our Consolidated Financial Statements for further information regarding our long-term debt. In 2023, we were awarded a new multi-year contract with the U.S. Military pursuant to which we will produce and ship a minimum number of pairs to the U.S. Military through 2026, with an option to extend.
Added
Growth in our Retail segment was primarily driven by increased sales on our owned e-commerce websites and third-party marketplaces, as we placed an emphasis on our direct-to-consumer business, partially through increased digital marketing in response to an ongoing shift among consumers to online retailers.
Removed
The first quarter of 2024 was the first full quarter in which shipments were made to the U.S. Military under this multi-year contract. The sales under this contract are included in our Contract Manufacturing segment. During the first quarter of 2023, we divested the Servus brand.
Added
See Note 7 - Long-Term Debt of our Consolidated Financial Statements for further information regarding our long-term debt. In the first quarter of 2025, we announced a share repurchase program, which was approved by the Board of Directors to allow the Company to repurchase up to $7.5 million of the Company's outstanding common stock.
Removed
The gain of approximately $1.3 million on the sale of the Servus brand was recorded within Interest Expense and Other - net in the Consolidated Statements of Operations for the year ended December 31, 2023.
Added
During the first quarter of 2025, the Company repurchased 10,456 shares of common stock under the plan using cash flows generated from operations. The year ended December 31, 2025 was a year of growth, led by top-line expansion in our Retail segment, particularly in our direct-to-consumer selling channel.
Removed
The Servus brand was sold to allow us to focus on our more profitable core brands and allocate resources toward growth and development of opportunities with those brands moving forward. During the third quarter of 2023, we closed our manufacturing facility in Rock Island, Illinois. This facility primarily manufactured product for the Servus brand.
Added
We delivered higher margins in 2025 compared to 2024 in both our Wholesale and Retail segments.
Removed
As the macroeconomic environment is continuously evolving, we are aware that global trends, such as inflationary pressures, are weakening consumer sentiment, negatively impacting consumer spending, and creating differing traffic patterns across channels. These conditions have led to elevated inventory levels in certain markets and an increased promotional environment.
Added
While the additional tariffs imposed in the second quarter of 2025 created margin pressures in the latter half of the year, we were able to ease the burden by diversifying our sourcing and leveraging our manufacturing facilities in the Dominican Republic and Puerto Rico as well as benefit from implementing price increases prior to realizing the impact of the tariffs.
Removed
We have also experienced higher interest rates which have resulted in increased borrowing costs. There is ongoing uncertainty surrounding the global economy and macroeconomic environment, which we expect to continue and could potentially cause disruption and near-term challenges for our business.
Added
We continue to monitor changes in policy impacting global trade, including tariffs, which have been dynamic, unpredictable, and subject to ongoing modification. Beginning in early 2025, pursuant to the International Emergency Economic Powers Act ("IEEPA"), the U.S. presidential administration modified and imposed significant additional tariffs on products imported from various countries, including those countries where we primarily source our products.
Removed
We continue to monitor pressures on the global supply chain, which have shifted the timing of shipments across our brands, resulting in increased inventory levels outpacing our sales growth.
Added
During the year ended December 31, 2025, we paid approximately $18.7 million in IEEPA tariffs. More recently, in February 2026, t he U.S. Supreme Court ruled that certain tariffs imposed under the IEEPA were unlawful.

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