Q4 2023 Rocky Brands Inc Earnings Call

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Operator: This generation is different today. This world has changed. Good afternoon, ladies and gentlemen, standing by. Welcome to the Rocky Brands fourth quarter and full year. At this time, all participants are in a list... Following the presentation, to conduct a question and answer session. All questions will be provided at that time for you to ask. Anyone who has any difficulties hearing the..., call star zero for operator assistance. I would like to remind everyone that this conference call is being recorded, and the conference. Frey.

Okay.

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Okay.

Good afternoon, ladies and gentlemen, and thank you for standing by.

Some to the Rocky brands fourth quarter and full year 2023 earnings conference call.

At this time all participants are in a listen only mode.

Following the presentation, we will conduct a question and answer session and instructions will be provided at that time for you to queue up for questions.

If anyone has any difficulties hearing the conference please.

These press star zero for operator assistance at any time.

I would like to remind everyone that this conference call is being recorded and will now turn the conference over to Brendon Frey of ICR.

Brendon Frey: Thank you, and thanks to everyone joining us today. Before we begin, please note that today's session, including the Q&A period, may contain forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1994. Such statements are based on information and assumptions available at this time and are subject to changes, risks, and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such data. For a complete discussion of the risks and uncertainties,

Thank you and thanks to everyone joining us today.

Before we begin please note that today's session, including the Q&A period may contain forward looking statements as defined by the private Securities Litigation Reform Act of 1095 and such.

Such statements are based on information and assumptions available at this time and are subject to changes.

Risks and uncertainties, which may cause actual results to differ materially.

We assume no obligation to update such statements.

For a complete discussion of the risks and uncertainties. Please refer to today's press release and our reports filed with the Securities and Exchange Commission, including our 10-K for the year ended December 31 2022.

Brendon Frey: Please refer to today's press release and our reports filed with the Securities and Exchange Commission, including our 10K for the year ended December 31st, 2021. And I'll now turn the conference over to Jason Brooks, Chief Executive Officer of Rocky Mountain.

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

Jason S. Brooks: Thank you, Brendon. With me on today's call is Tom Robertson. After Tom and I've made our prepared remarks, we will be happy to take questions. Our company has transformed significantly over the past few years following the impact of COVID. The organization did a very good job navigating the early days of the pandemic, integrating a large acquisition, bringing on a new distribution center, and serving our customers and consumers during this volatile market condition. While 2023 had its share of challenges, the fundamentals of our business are solid, and we are in a great position operationally and financially to invest in our growth. Encouragingly, our reported results improved throughout the year as solid sell-through of our products coupled with over-inventory levels continuing to improve at the majority of our wholesale accounts positively impacted our sell-in.

Thank you Brendan.

With me on today's call is Tom Robertson.

After Tom and ice prepared remarks, we will be happy to take questions.

Our company has transformed significantly over the past few years following the impact from Covid.

The organization did a very good job navigating the early days of the pandemic integrating a large acquisition.

Bringing on a new distribution center in servicing our customers and consumers during this volatile market conditions.

While 2023 had its share of challenges the fundamentals of our business are solid and we are in a great position operationally and financially to invest in our growth.

Encouragingly, our reported results improve throughout the year as solid sell through of our products coupled with over inventory levels continuing to improve at the majority of our wholesale accounts.

Tivoli impacted our sell in.

Jason S. Brooks: Despite some unexpected headwinds in the fourth quarter, net sales improved sequentially from the third quarter, and year-over-year declines moderated to their lowest levels in 2023, due in part to high single-digit growth in our direct e-commerce channels. Equally important, we made great progress strengthening our balance sheet throughout 2023, highlighted by a 66 million, or 28 percent, reduction in our inventories and an 84 million, or 33 percent, decline in our debt levels compared with the end of 2022. Tom will cover the numbers in more detail shortly, but first, I want to spend a few minutes reviewing our fourth-quarter sales performance by category and brand. Starting with work, the four brands that make up this category, Georgia, Rocky, and select styles under the Muck and Extra Tough brands, continue to improve this quarter, with several areas to highlight.

Despite some unexpected headwinds in the fourth quarter net sales improved sequentially from the third quarter and year over year declines moderated to their lowest levels in 2023 due in part to high single digit growth in our direct e-commerce.

Channel.

Equally important we made great progress strengthening our balance sheet throughout 2023 highlighted by a $66 million or 28% reduction in our inventories.

And then $84 million or 33% decline in our debt levels compared with the end of 2022.

Tom will cover the numbers in more detail shortly but first I wanted to spend a few minutes reviewing our fourth quarter sales performance by category and brands.

Starting with work.

For brands that make up this category, Georgia, Rocky and select styles under the muck and extra tough brands continued to improve this quarter with several areas to highlight.

Jason S. Brooks: The Georgia brand continued to build momentum from the third quarter as partner inventory constraints that stalled reorders throughout 2023 began to moderate, driving wholesale demand to the strongest level of the year. The Georgia brand saw strong sell-in with several of our largest accounts in the farm and ranch segment this quarter, increasing sales with these customers on both a sequential basis and compared to a year-ago period. Additionally, this year's cost savings and subsequent selective price decreases on certain Georgia styles helped spur a notable pickup in demand for the brand, while the recent inventory backlogs caused many accounts to be more conservative and narrow new orders to best-selling SKUs. Two new product introductions in 2023 that have been well-received drove outsized demand this quarter, contributing significantly to Georgia's recent progress. Ladies and gentlemen, the line while we get started: Hello, this is Jason Brooks.

The Georgia brand continued to build momentum from the third quarter as partner inventory constraints that stalled reorders throughout 2023 began to moderate driving our wholesale demand to the strongest level of the year.

The brand saw strong sell in with several of our largest accounts in the farm <unk> Ranch segment. This quarter, increasing sales with these customers on both a sequential basis and compared to a year ago period.

Additionally, this year's cost savings and subsequent selective price decreases on certain Georgia styles helped spur a notable pickup in demand for the brand.

While the recent inventory backlogs cause many accounts to be more conservative and narrower or new orders to best selling S. K use.

Two new product introductions in 2023 that have been well received drove outsized demand this quarter.

Contributing significantly to George's recent progress.

Ladies and gentlemen, we seem to be experiencing some technical difficulties. Please remain on the line, while we get the difficult.

These results. Thank you.

Jason S. Brooks: We got cut off there for a minute, so I will... start with the Georgia brand. The Georgia brand continued to build momentum from the third quarter as a partner. Inventory constraints that stalled reorders throughout 2023 began to moderate, driving wholesale demand to the strongest levels of the year. The brand saw strong sell-in with several of our largest accounts in the farm and ranch segment this quarter, increasing sales with these customers on both a sequential basis and compared to a year ago. Additionally, this year's cost savings and subsequent selective price decreases on certain Georgia styles helped spur a notable pickup in demand for the brand. While the recent inventory backlogs caused many accounts to be more conservative and narrow new orders to best-selling SKUs, two new product introductions in 2023 that have been well-received drove outsized demand this quarter, contributing significantly to Georgia's recent progress. Strong sell-through for these new styles demonstrates that the Georgia brand remains relevant and in demand with consumers, even in the current environment. The rocky work brand remained challenged this quarter, with excess inventory levels continuing to impact replenishment orders.

Hello. This is Jason Brooks, we got cut off there for a minute so I will.

I'll start with the Georgia brand, the Georgia brand continued to build momentum from the third quarter as a partner inventory constraints that stalled reorders throughout 2023 began to moderate driving wholesale demand to the strongest levels of the year. The brand saw strong sell in with several of our largest occur.

<unk> in the farm <unk> Ranch segment this quarter, increasing sales with these customers on both a sequential basis and compared to a year ago period.

Additionally, this year's cost savings and subsequent selective price decreases on certain Georgia styles helped spur a notable pickup in demand for the brand while the recent inventory backlogs caused many accounts to be more conservative and narrow new orders two best selling skus.

Two new product introductions in 2023 that have been well received drove outsized demand this quarter.

<unk> significantly to George's recent progress.

Strong sell through for these new styles demonstrates that the Georgia brand remains relevant and in demand with consumers even in the current environment.

Our Rocky work brand remained challenged this quarter with excess inventory levels continuing to impact replenishment orders. However, there was some positive momentum, particularly with new higher priced products, we've seen strong sell through with the top tier work boots, and we introduced a new.

Jason S. Brooks: However, there was some positive momentum, particularly with new, higher-priced products. We've seen strong sell-through with the top-tier work boots, and we introduced a new line of similar products at retailers for more moderate prices in the fourth quarter. This new product line, made in our own Dominican facility, should provide solid top line and margin contributions for the Rocky work in the years to come, shifting to our rubber boot-based work product, both the muck and extra tough brands on their on their positive 2023 momentum in the fourth quarter.

New line of similar product that retailers for more moderate prices in the fourth quarter.

This new product line made in our own Dominican facility should provide solid topline and margin contributions for the rocky work in the years ahead.

Shifting to our rubber based work product, both mark and extra Chuff brands on there.

They're positive 2023 momentum in the fourth quarter. The muck brand delivered a positive year over year comparison underscoring the work we've done in recent quarters to reinvigorate the brand as we continue to adjust much brand message communicate more directly with our targeted <unk>.

Jason S. Brooks: The MUC brand delivered a positive year-over-year comparison, underscoring the work we've done in recent quarters to reinvigorate the brand. As we continue to adjust MUC's brand message to communicate more directly with our targeted audience, we've seen the brand's marketing metrics significantly outperform industry benchmarks, and Consumer Demand has resigned in kind. For the first time this year, we saw year-over-year growth in the U.S. Wholesale market for the muck works. Also helping fuel this demand, MUC decreased prices on several legacy products in November and also introduced 12 new styles for the fall winter season. While above average temperatures to start the fall 23 season posted a slight headwind, we are confident that MUC is well positioned coming into 2024.

Audience, we've seen the brand's marketing metrics significantly outperformed industry benchmarks.

And consumers demand has resignation inclined for the first time. This year, we saw year over year growth in the U S wholesale market for the muck work.

Helping fuel this demand marked decrease prices on several legacy products in November and also introduced 12, new styles for the fall winter season.

While above average temperatures to start the fall 'twenty three season posted a slight headwind we are confident that mark is well positioned coming into 2024.

Jason S. Brooks: Extra Tough carried its positive momentum from Q3 into Q4, outpacing expectations driven by significant year-over-year growth in both the U.S. wholesale market and the e-commerce chain. We saw partner inventory positions improve as the quarter progressed, driving stronger bookings for 2024 during the period. At the same time, we persistently added at-once business for in-demand styles that resulted in very strong sell-through and left us chasing inventory in key sizes.

Extra tough carried its positive momentum from Q3 into Q4 outpacing expectations is driven by significant year over year growth in both the U S wholesale market and the E Commerce channel.

We saw partner inventory positions improve as the quarter progressed driving stronger bookings for 2024 and the period at the same time, we persistently added at once business for in demand styles that resulted in very strong sell through and left us chasing inventory in key sizes.

Jason S. Brooks: With awareness of Extra Tough surging, we will look to capitalize on the growing relevance of the brand and ensure product availability for our growing Extra Tough consumer base in 2024. Turning now to our Western business, while many top accounts are currently operating on replenishment-only ordering, Durango was able to secure several nice bookings in the period that accelerated fourth quarter results, well ahead of the trend earlier in the year. We saw strong orders from key accounts in both replenishment inventories due to the strong sell-through and to the stock for holiday 23 and early 24.

With awareness of extra tough surging, we will look to capitalize on the growing relevance of the brand and ensuring product availability for our growing extra tough consumer base in 2024.

Turning now to our western business, while many top accounts are currently operating on replenishment only ordering Durango was able to secure several nice bookings in the period that accelerated fourth quarter results well ahead of the trend earlier in the year, we saw strong orders from key accounts in both replenishment.

Inventories due to the strong shelf through into the stock for holiday 'twenty three in early 'twenty four.

Jason S. Brooks: We also saw the best quarter of the year from our field accounts, with new distribution channels and an improving retail climate acting as positive catalysts for the brand. Most importantly, customers are reporting that they are now in significantly improved inventory positions, which allows us with our focus on modernizing our inventory to eliminate slow-moving styles and better stock or best sellers to take advantage of growing demand, positions the brand for higher turns and more favorable results going forward. Our Rocky Western business continues to stabilize, and we saw several bright spots this quarter across the channel.

We also saw the best quarter of the year from our field accounts with new distribution channels, and an improving retail climate acting as part of the positive catalyst for the brand.

Most importantly customers are reporting that they are now and significantly improved inventory positions, which allow with with our focus on modernizing our inventory to eliminate slow moving styles and better stock or best sellers to take advantage of growing demand.

Positions the brand for higher turns and more favorable results going forward.

Our rocky Western business continues to stabilize and we saw several bright bright spots this quarters across the channel. This included strong growth with our own E Commerce channel along with solid results from our Dot Com partners and within key western boot retailers, who saw better sell through in the quarter.

Jason S. Brooks: This included strong growth with our own e-commerce channel, along with solid results from our dot-com partners and within key Western boot retailers who saw better sell-through in the quarter. Looking ahead, we are optimistic that the improving retail trends we've seen this quarter will allow our overall Western business to return to its historical growth trajectory. Outdoor, which includes styles under our Rocky, Muck, and Extra Tough brands, began to stabilize in the fourth quarter after a very difficult first nine months of the year, particularly for our Rocky Outdoor booth and apparel line.

Looking ahead, we are optimistic that the improving retail trends we've seen this quarter will allow our overall western business to return to its historical growth trajectory.

Which includes styles under our rocky Mark and extra top brands.

Dan to stabilize in the fourth quarter after a very difficult first nine months of the year, particularly for our rocky outdoor boots and apparel lines. During the quarter was still challenged by unfavorable weather conditions.

Jason S. Brooks: Though the quarter was still challenged by unfavorable weather conditions, e-commerce gains, improving wholesale trends, and partner inventory improvements helped the category reposition to take advantage of improving trends going forward. Also, as I mentioned when we discussed our work product, both Extra Tough and Muck Brands delivered a notable improvement in this quarter, driven in part by new penetration of the outdoor product in more outdoor-focused marketing. Last but not least, within our wholesale segment, commercial military was a bright spot in the fourth quarter, as it has been all year. Orders from suppliers of the U.S. Army and for the Division's Code Red fire collection drove a great fourth quarter to cap off the strongest year in recent memory for this business.

Commerce gains improving wholesale trends and partner inventory improvements healthy category repositioning to take advantage of improving trends going forward.

Also as I mentioned, when we discussed our work product.

It's extra tough and muck brands delivered a notable improvement in this quarter drill.

<unk> in part by new penetration of the outdoor product and more outdoor focused marketing.

Last but not least within our wholesale segment commercial military was a bright spot in the fourth quarter has it has been all year orders from suppliers in the U S Army and for the divisions code Red Fire collection drove a great fourth quarter to cap off the strongest year in recent memory for this business.

Jason S. Brooks: Shifting to our retail segment, sales increased low single digits compared to a year ago period thanks to a very solid quarter for our direct e-commerce channel. Each of our branded sites, Rocky, Georgia, Durango, Muck, and Extra Tough, saw double-digit traffic and sales increases in the quarter. We continue to enhance our digital marketing efforts, allowing us to engage with consumers more directly, and we expect this trend to continue going forward, which should positively impact the segment's growth and margin profile. Lastly, our B2B Lehigh business was down year over year in line with expectations as we lapped a very strong quarter of growth in 2022. We expect that sales will rebound in 2024 as comparison fees and event bookings continue to increase, along with the introduction of the several new key accounts slated for this year.

Shifting to our retail segment sales increased low single digits compared to a year ago period. Thanks to a very solid quarter for our direct E Commerce channel each of our branded sites Rocky, Georgia, Durango, Mark and extra tough saw double digit traffic and say.

Those increases in the quarter, we continued to enhance our digital marketing efforts, allowing us to engage with consumers more directly and we expect this trend to continue going forward, which should positively impact the segment's growth and margin profile.

Lastly, our b to B Ley <unk> business was down year over year in line with expectations as we lapped a very strong quarter of growth in 2022.

We expect that sales will rebound in 2024 as comparisons ease and events bookings continue to increase.

Along with the introduction of several new key accounts slated for this year.

Jason S. Brooks: As ready as I am to put 2023 behind us, I am pleased that the work we did strengthening our product innovation, brand building, consumer connections, and fulfillment capabilities started to translate into improved results towards the end of the year. By focusing on controlling what we can control, we exited 2023 with good momentum and were well-situated to deliver growth and enhanced earnings in 2024. Before I turn the call over to Tom, I want to thank the entire Rocky team for their efforts and commitment to excellence. We have weathered the ups and downs over the past four years and have emerged a stronger organization that I am confident will benefit the business and shareholders over the next year and the long term. Thank you, Tom.

As ready as I am to put 2023 behind us I am pleased that the work we did strengthening our product innovation brand building consumer connections and fulfillment capabilities started to translate into improved results towards the end of the year.

By focusing on controlling what we can control.

We exited 2023 with good momentum and we're well situated to liver growth enhanced earnings in 2024.

Before I turn the call over to Tom I want to thank the entire rocky team for their efforts and their commitment to excellence, we have weathered the ups and downs over the past four years and have had emerged a stronger organization that I am confident it will benefit the business our shareholders over the next.

Year and long term.

Thank you Paul.

Tom Robertson: Thanks, Jason. As Jason shared, we are pleased to see recent top-line pressures on our wholesale business begin to moderate this quarter, resulting in sequential quarter-over-quarter growth in sales and the lowest level of year-over-year declines we've seen all year. For the fourth quarter, sales decreased 9.3% year-over-year to $126 million, or 6% when you exclude service brand sales of $4.9 million from the year-ago period. By statement, on a reported basis, wholesale sales decreased 13.3%, or 8.8% excluding service, to $85.8 million.

Thanks, Jason.

<unk> shared we are pleased to see recent topline pressures to our wholesale business began to moderate this quarter, resulting in sequential quarter over quarter growth in sales and the lowest lowest level of year over year declines we've seen all year for the fourth quarter sales decreased nine 3% year over year to 120.

$6 million or 6% when you exclude service brand sales of $4 $9 million from the year ago period.

This segment on a reported basis wholesale sales decreased 13, 3% or eight 8% excluded excluding the service.

To $85 8 million retail sales increased one 5% to $37 8 million in contract manufacturing sales were $2 3 million.

Tom Robertson: Retail sales increased 1.5% to $37.8 million, and contract manufacturing sales were $2.3 million, turning to gross profit for the fourth quarter. $50.7 million, or 40.3% of sales, compared to $56.7 million, or 40.8% of sales, in the same period last year. The 50 basis point decrease in gross margin as a percentage of net sales was mainly attributable to a tough year-over-year comparison related to a tariff recovery within an approximate impact of $2.4 million in the prior year period.

Turning to gross profit for the fourth quarter gross profit was.

$57 million.

43% of sales compared to $56 7 million or 48% of sales in the same period last year. The 50 basis point decrease in gross margin as a percentage of net sales was mainly attributable to a tough year over year comparisons related to a tariff recovery.

Within an approximate impact.

$2 $4 million in the prior year period. This was partially offset by a higher mix of retail segment sales, which carry higher gross margins than the wholesale and contract manufacturing segments.

Tom Robertson: This was partially offset by a higher mix of retail segment sales, which carry higher gross margins than the wholesale and contract manufacturing segments. Gross margins by segment were as follows. Wholesale was down 120 basis points to 35.4%. However, excluding the tariff recovery benefit a year ago, wholesale gross margins were up 120 basis points. Meanwhile, retail gross margins were down 30 basis points to 52.9% and Contract manufacturing was down to 13.7%. Operating expenses were $36.0 million or 28.6% of net sales in the fourth quarter of 2023, compared to $43.1 million or 31% of net sales last year. On an adjusted basis, operating expenses were $35.2 million in the current year period and 41.4 million a year ago.

Gross margins by segment, whereas follows wholesale down 120 basis points to 35, 4%. However, excluding the tariff recovery benefit a year ago wholesale gross margins were up 120 basis points. Meanwhile, retail gross margins were down 30 basis points.

52, 9% and.

Thanks.

Contract manufacturing was down 13 down to 13, 7%.

Operating expenses were $36.0 million or 28, 6% of net sales in the fourth quarter of 2023.

Compared to $43 1 million or 31% of net sales last year on an adjusted basis operating expenses were $35 $2 million in the current year period, and $41 4 million in a year ago.

Tom Robertson: The decrease is largely attributable to cost savings reviews and operational efficiencies that we achieved through strategic restructuring initiatives implemented over the past year. As a percentage of sales, adjusted operating expenses were 27.9% in the fourth quarter of 2023 compared to 29.8% a year ago. Income from operations was $14.7 million, or 11.7% of net sales, compared to $13.6 million, or 9.8% of net sales in the year-ago period. Adjusted operating income was $15.5 million, or 12.3% of net sales, compared to adjusted operating income of $15.3 million, or 11% of net sales a year ago. For the fourth quarter of 2023, interest expense was $5.3 million, compared with $5.9 million in the year-ago period.

The decrease is largely attributable to cost savings reviews, and operational efficiencies that we achieved through strategic restructuring initiatives implemented over the past year.

As a percentage of sales adjusted operating expenses were 27, 9% in the fourth quarter of 2023 compared to 29, 8% a year ago.

Income from operations was $14 7 million or 11, 7% of net sales compared to $13 $6 million or nine 8% of net sales in a year ago period. Adjusted operating income was $15 5 million or 12, 3% of net sales compared to adjusted operating income.

<unk> of $15 3 million or 11% of net sales a year ago.

For the fourth quarter of 2023 interest expense was $5 $3 million compared with $5 9 million in the year ago period. The decrease reflects lower debt levels in the quarter compared to the fourth quarter of 2022.

Tom Robertson: The decrease reflects lower debt levels in the quarter compared to the fourth quarter of 2022. On a GAAP basis, we reported net income of $6.7 million, or $0.91 per diluted share, compared to net income of $6.5 million, or $0.89 per diluted share, in the fourth quarter of 2022. Adjusted net income for the fourth quarter of 2023 was $7.3 million, or $0.98 per diluted share, compared to adjusted net income of $7.9 million, or $1.08 per diluted share a year ago. The effective tax rate for the fourth quarter of 2023 increased to 29% compared to 16.1% a year ago.

On a GAAP basis, we reported net income was $6 $7 million or <unk> 91 per diluted share compared to net income of $6 5 million or <unk> 89 per diluted share in the fourth quarter of 2022.

Adjusted net income for the fourth quarter of 2023 was $7 3 million or <unk> 98 per diluted share compared to adjusted net income.

$7 $9 million or $1 <unk> per diluted share a year ago.

The effective tax rate for the fourth quarter of 2023 increased to 29% compared to 16, 1% a year ago.

Tom Robertson: The year-over-year increase, which was higher than our initial projections, was driven primarily by a return-to-provision adjustment resulting from foreign tax credits recognized in the fourth quarter of 2023. Turning to our full year results, While the year was challenged by our wholesale partners working through excess inventories, we were encouraged by solid retail sell-through and the growing performance of our e-commerce site. 2023 was also a year in which we made great progress strengthening our balance sheet and positioning the company for future growth. For the full year, net sales were down 25% or 24.3% on an adjusted basis to $463.4 million. Excluding NEOS and service brand sales, which were divested in September 22 and March 23, respectively, adjusted net sales decreased approximately 20.9%. By segment, wholesale decreased 30.5% or 27.2%, excluding the NIOs and service brands.

The year over year increase which was higher than our initial projections was driven primarily by a return to provision adjustment, resulting from foreign tax credits recognized in the fourth quarter of 2023.

Turning to our full year results, while the year was challenged by our wholesale partners working through excess inventories. We were encouraged by solid retail sell through and a growing performance of our E. Commerce sites 2023 was also a year in which we made great progress strengthening our balance sheet and positioning the company for.

Future growth.

For the full year net sales were down 25% or 24, 3% on an adjusted basis to $463 4 million.

Excluding the US and service brand sales, which were divested in September of 2002, and March 23, respectively. Adjusted net sales decreased approximately 29%.

Segment wholesale decreased 35% or 27, 2%, excluding the Nielsen service brands retail was up one 4% and contract manufacturing decreased 48, 4%.

Tom Robertson: Retail was up 1.4%, and contract manufacturing decreased 48.4%. In terms of profitability, adjusted operating income decreased 13.7% to $41.9 million, while adjusted operating margins increased 110 basis points to 9% of net sales. Adjusted net income was $14.3 million, and adjusted EPS was $1.93. For the full year, interest expense was $22.7 million, an increase of 24% compared with $18.3 million in 2022.

In terms of profitability adjusted operating income decreased 13, 7% to $41 9 million.

While adjusted operating.

Margins increased 110 basis points to 9% of net sales.

Adjusted net income was $14 3 million and adjusted EPS was $1 93.

For the full year interest expense was $22 $7 million, an increase of 24% compared with $18 $3 million in 2022, and our effective tax rate for 2023 was 26, 3% compared to 26% in the prior year, which was above our projected tax rate for 'twenty.

Tom Robertson: And our effective tax rate for 2023 was 26.3% compared to 20.6% in the prior year, which was above our projected tax rate for 2023 of 20.8% due to the foreign tax credit adjustment in the fourth quarter I mentioned a moment ago. Turning to our balance sheet, at the end of the fourth quarter, cash and cash equivalents stood at $4.5 million, and our debt totaled $173.1 million. We made excellent progress paying down our debt over the last 12 months, with total indebtedness 32.6% lower compared to the end of last year. A big part of the debt paydown has been driven by our ability to strategically reduce our inventory levels. At the end of the fourth quarter, inventories were $169.2 million, down $66.2 million, or 28.1% compared to $235.4 million a year ago.

23 of 28% due to the foreign tax credit adjustments in the fourth quarter I mentioned a moment ago.

Turning to our balance sheet at the end of the fourth quarter cash and cash equivalents stood at $4 $5 million and our debt totaled $173 1 million, we made excellent progress paying down our debt over the last 12 months with total indebtedness 32, 6% lower compared to the end of last year, a big part of the debt Paydown.

<unk> has been driven by our ability to strategically reduce our inventory levels at the end of the fourth quarter inventories were $169 $2 million down $66 2 million or 28, 1% compared to 235 $4 million a year ago.

Now to our outlook before I get into how we're thinking about 2024 I want to highlight a couple of business changes that impact year over year comparisons first as you recall, we sold the service brand at the end of the first quarter of last year. Following the sale, we continued to manufacture and supply of product to the new owners of the brand for several months as part of the <unk>.

Tom Robertson: Now to our outlook. Before I get into how we were thinking about 2024, I want to highlight a couple business changes that impact year-over-year comparisons. First, as you recall, we sold a service brand at the end of the first quarter of last year. Following the sale, we continued to manufacture and supply products to the new owners of the brand for several months as part of the transition process. The second change had to do with our distribution in Canada.

<unk> process the.

The second change had to do with their distribution in Canada in November we switched from direct operations to a distributor model for our Rocky, Georgia Boot Durango, Mark and extra top brands. While this decision negatively impacts our top line in the near term it contributes positively to profitability as there is little to no SG&A.

She added with the new agreement. In addition to these two changes we also fulfilled an elevated amount of orders to a customer that supplies. The U S Army with footwear.

Tom Robertson: In November, we switched from direct operations to a distributor model for our Rocky, Georgia Boot, Durango, Muck, and Extra Tough brands. While this decision negatively impacts our top line in the near term, it contributes positively to profitability, as there is little to no SG&A associated with the new agreement. In addition to these two changes, we also fulfilled an elevated amount of orders to a customer that supplies the US Army with footwear. This temporary spike in demand was driven by the escalation of global geopolitical events, and given their current inventory position, we do not expect this level of selling to repeat itself. In total, we anticipate approximately $26 million in revenue from 2023 will not recur in 2024.

This temporary spike in demand was driven by escalation and global geopolitical events.

Their current inventory position, we do not expect this level of sell in to repeat itself in total we anticipate approximately $26 million in revenue from 2023 will not reoccur in 2024.

Looking at this year, we expect revenue to be in the range of $450 million to $460 million. This represents approximately 3% to 4% growth over 2020, Three's adjusted base of $438 million, which excludes the aforementioned nonrecurring revenue in terms of cadence of revenue we expect to see.

Slight growth in the first half of the year before accelerating in the second half we expect margin gross margin to remain consistent with <unk>.

Consistent or to see slight improvement from the adjusted gross margins. We delivered in 2023. This will be partially offset by SG&A deleverage as 2024 includes investments in marketing for our brands as well as performance based compensation as we did not pay any bonuses in 2023.

Tom Robertson: Looking ahead, we expect revenue to be in the range of $450 to $460 million. This represents approximately 3% to 4% growth over 2023's adjusted base of $438 million, which excludes the aforementioned non-recurring revenue. In terms of the cadence of revenue, we expect to see slight growth in the first half of the year before accelerating in the second half. We expect margin, and gross margin to remain consistent with, or to see slight improvement from, the adjusted gross margins we delivered in 2023. This will be partially offset by SG&AD leverage as 2024 includes investments in marketing for our brands, as well as performance-based compensation as we did not pay any bonuses in 2023. The biggest change year-over-year will be in our interest expense as a result of the progress we've made paying down our debt. Based on the year-end debt levels and current interest rates, we expect interest expense to be down approximately $5 million.

The biggest change year over year will be in our interest expense as a result of the progress we've made paying down our debt based on the year end debt levels and current interest rates, we expect interest expense to be down approximately $5 million.

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

Yeah.

Yes.

Thank you ladies and gentlemen, we will now begin the question and answer session.

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Please lift the handset before pressing any keys.

Woman. Please for your first question.

Your first question comes from the line of Janine Stichter with BTG.

Please go ahead.

Hi, Thanks for taking my questions first on the Rocky brand I think you mentioned some excess inventory in the channel. There I was hoping you could elaborate a bit on that and then more broadly on channel inventories if theres any other pockets of access it sounds like in general it's pretty clean and then also wanted to ask on extra tough some really nice momentum there I would just love to hear more about.

Operator: That concludes our prepared remarks. Operator, we are now ready for questions. Thank you. Ladies and gentlemen, we will now, we have followed by the, here at Three Tone Prom Technology, are there, wish to decline from the polling process, followed by..., handset. This next question comes from the line of Janine Stichter.

How youre thinking about potential for that to have more of a year round business and just to round out this.

The filing period, making it more or less of the season.

Thank you.

Yes, Thank you Janine Theres a lot of questions in there.

Janine Marie Hoffman Stichter: Hi, thanks for taking my questions. First, on the Rocky Brand, I think you mentioned some excess inventory in the channel there. I was hoping you could elaborate a bit on that. And then, more broadly, on channel inventories, if there's any other pockets of excess, it sounds like, in general, it's pretty clean. And then also wanted to ask about Extra Tough.

So I think the first one was about rocky.

Some inventory.

I think in <unk>.

Brett.

All of the brands, we are in a pretty good inventory position on.

From our own inventory and I feel like most of the retailers have gotten themselves into a pretty good place from an inventory position. Although I do believe they are still being very cautious about how they are.

Jason S. Brooks: You have some really nice momentum there. I would just love to hear more about how you're thinking about the potential for that to become more of a year-round business and just to round out the selling period, making it less of a seasonal business. Thank you.

Booking orders and filling in.

There's this conversation going around obviously, we're in an election year. So I think that makes everybody a little bit nervous, but I believe that we are in a pretty good position and our retailers are in a pretty good position, but that still some cautious cautiousness around that.

Jason S. Brooks: Yeah, thank you, Janine. There were a lot of questions in there. So I think the first one was about Rocky and some inventory.

The other one I remember was extra tough.

I think the first one was rocky in the the last one was actually itself I'm not sure I remember them.

Jason S. Brooks: I think all of the brands we are in a pretty good inventory position from our own inventory. And I feel like most of the retailers have gotten themselves into a pretty good place from an inventory standpoint, although I do believe they are still being very cautious about how they are booking orders and filling in. There's this conversation going around, obviously, we're in an election year.

Okay.

Okay.

Yes.

Brian it's unique in that sense it.

More of a summer brand everything from a boating and fishing perspective. So we've seen we've seen success or the seasonality of that business, maybe leans a little more Q2 S. P.

People loading for most of the east coast, finishing which happens.

In the in the summer months.

However, we have introduced new products like the <unk> Glacier, correct, which is our fleece lined version and we also have the trolling pack collection, which is also fleece line and so we're seeing people.

Jason S. Brooks: So I think that makes everybody a little bit nervous. But I believe that we are in a pretty good position and our retailers are in a pretty good position. There's still some cautiousness around that. The other one I remember was extra tough. I think the first one was Rocky and the last one was Extra Tough. I'm not sure; I don't remember the name.

Brace that product for their fall and winter heat as well as.

As well as we've also launched.

Some new sandals slides and flip flops.

We anticipate selling strong in the spring as well, yes, I would just add that in general if you think of all of our brands.

I talk about us not being very sexy and in Rocky, Georgia, Durango and Mark.

Jason S. Brooks: Yeah, the Extra Tough brand is unique in that since it's more of a summer brand, if you think from a boating and fishing perspective, so we've seen success, or the seasonality of that business maybe leans a little more toward Q2, as people load in for most of the East Coast fishing, which happens in the summer months. However, we have introduced new products, like the Ankle Deck Glacier Trek boot, which is a fleece-lined version, and we also have the Trolling Pack collection, which is also fleece-lined, and so we're seeing people embrace that product for their fall and winter boots as well, as well as we've also launched some new sandals, slides, and flip-flops that we anticipate selling strong in the spring as well.

Extra tough as probably the Sexiest brands we have.

And we see a big opportunity for expansion there we want to be really careful about how we do it and try to control that and make sure. We don't go too fast and too broad too quick.

We're really excited about that brand and I think there are some big opportunity and upside.

Perfect. That's helpful. And then maybe one last one if you could just elaborate on the DTC strength youre seeing with E Commerce, and maybe just a little bit more about what you've been doing there to drive at the Shanghai is in that business.

Yes.

Thank.

This evening everybody else's alright, we are doing more advertising on social media, we are appealing to the younger crowd. We are getting in front of them via the Instagram is the all the platforms out there and introducing them to our brands and we are.

Jason S. Brooks: Yeah, I would just add that, in general, if you think of all of our brands, I talk about us not being very sexy in Rocky, Georgia, Durango, and Muk. Extra Tough is probably the sexiest brand we have, and we see a big opportunity for expansion there. We want to be really careful about how we do it and try to control that and make sure we don't go too fast and too broad too quickly, so we're really excited about that brand, and I think there's a big opportunity for Upside.

Seeing.

A lot more traffic to our own websites, we are seeing a lot more <unk>.

Transition transactions through our own website, and so I think the brands are resonating and even back to the extra tough I would tell you that that is one brand that even more resignations from an internet e-commerce kind of standpoint so.

I don't know if you had anything to add Tom Yeah, I think as we look into 2024 I called out in the guidance the investment.

Jason S. Brooks: And then maybe one last one, if you could just elaborate on the DTC strength you're seeing with e-commerce, maybe just a little bit more about what you've been doing there to drive the strong growth in that. Yeah, I think, you know, I think the same thing everybody else is doing, right? We are doing more advertising on social media. We are appealing to the younger crowd.

In marketing and a lot of those investments investments in marketing are going to be happening.

Digitally whether it's social media or pay per click.

Search so so we're going to continue to drive consumers to our websites and it's really the extra top brand adjacent point, it's really become apparent that consumer is much quicker to buy online than than some of our other brands with almost a third of the sales in the fourth quarter fresh start happening.

Jason S. Brooks: We are getting in front of them via the Instagrams, the, you know, all the platforms out there and introducing them to our brands. And we are seeing, you know, a lot more traffic on our own websites. We are seeing a lot more transition transactions through our own website, and so I think the brands are responding. And even back to the extra tough, I would tell you that that is one brand that even more resonates from an Internet e-commerce kind of standpoint. So I don't know if you have anything to add, Tom.

Through our own E Commerce channel. So we're excited about the trajectory of our ecommerce business and continuing to invest in it in 2024.

Do you want to add though it is a balancing act you know our wholesale partners are very important to us and we have to navigate that as well as we as we go through this.

Great. Thanks, so much.

Okay.

Your next question comes from the line of Jeff Glick with B Riley financial.

Please go ahead.

Tom Robertson: Yeah, I think, you know, as we look into 2024, I called out in the guidance that the investment in marketing and a lot of those investment investments in marketing are going to be happening digitally, whether it's through social media or pay-per-click or search. So we're going to continue to drive consumers to our websites. And it's really the extra tough brand, to Jason's point, it's really apparent that the consumer is much quicker to buy online than some of our other brands, with almost a third of the sales in the fourth quarter for extra tough happening, you know, on our own e-commerce channels. So we're excited about the trajectory of our e-commerce business and will continue to invest in it in 2024. I do want to add, though, that it's a balancing act. You know, our wholesale partners are very important to us, and we have to navigate that as well as we go through this. Great, thanks so much.

Good afternoon, Jason that Tom.

I was wondering if you could talk a little hi, thanks for taking the question.

I was wondering if you could hit on Lehigh.

Just as we look at last year as the baseline and as we filter through into 2024, you had mentioned the compares get a little easier as the year wears on maybe just talk about where that business is any key account wins also some of the stuff that you had going with the technology just kind of curious.

How that business is holding up and what we should think about for 2024.

Yes.

I'll take this one off Jeff the Lehigh business for US has grown over the last several years I think this year was a little challenging for 2022.

Thank you.

The PPE World and the safety management HR managers in the World had more dollars in their budgets in 2022, and we saw that particularly at the end of 2022 when we saw.

People get incremental vouchers and subsidies to buy additional products, whether it be footwear or flip.

Beds are orthotics.

So we knew we had a very tough comparison going into into 2023.

We guided the business, where we expect the business to be down in 2020 in the fourth quarter of 2023 and it actually it met our expectations.

Jeffrey Francis Lick: This next question comes from the line of Jeff Lick with... B. Reilly, Finance, boy. Good afternoon, Jason and Tom. I was wondering if you could talk a little bit. Thanks for taking the question. I was wondering if you could hit on Lehigh.

And so I think we saw a little bit earlier in the year or two where we saw we started to see some business is pulling back a little bit on their spend.

Tom Robertson: And just as we look at last year as the baseline, and as we filter through into 2024, you mentioned that comparisons get a little easier as the year wears on. Maybe just talk about where that business is, any key account wins. Also, you know, some of the stuff that you had going with the technology, just kind of curious about how that business is holding up and what we should think about for 2020. Yeah, I'll kick this one off, Jeff. The Lehigh business for us has grown over the last several years, but I think this year was a little challenging for it.

They were doing their own SG&A savings or budget cuts and.

And so and so we feel that we.

We've opened up some new key accounts at the end of this year that kicked off in January so we feel good about the business in 2024, and presumably you would get back to growth, but the Lehigh business in 2024.

Great and just one.

Kind of follow up.

Kind of building on what Janine was talking about I'm, just curious in terms of the national accounts.

A bigger.

Kind of needle movers I'm just curious.

Not asking you to name names, where things stand in terms of their willingness to.

Maybe be a little more aggressive Bob call it less than buying to needed actually pre booking and ordering a little more aggressively.

Tom Robertson: In 2022, I think that the PPE world and the safety managers and HR managers of the world had more dollars in their budgets in 2022, and we saw that particularly at the end of 2022 when we saw people get incremental vouchers or subsidies to buy additional products, whether it be footwear or footbeds, or orthotics. And so we knew we had a very tough comparison going into 2023. We guided the business, or we expected the business to be down in 2020, in the fourth quarter of 2023, and it actually met our expectations. And so I think we saw a little bit earlier in the year, too, where we started to see some businesses pulling back a little bit on their spin as they were doing their own SG&A savings or budget cuts.

Yeah. Good question, Jeff I think we have seen this.

Loosen up a little bit.

They are definitely.

Being more active or.

Not only in regards to at once business, but some some booking business as well or at least forecasting and giving us that information. So we've definitely seen that open up in the outdoor category. The farm <unk> ranch category the western category.

And so that's been that's been a good sign I will say it is still.

Everybody still seems to be pretty cautious and what theyre doing it and how they are doing it but it's definitely changed a little bit for us.

I think Greg I think Jeff just to add on you know as we look at as we look at like our bookings for the rest of the year bookings are up.

Tom Robertson: And so we feel that we've opened up some new key accounts at the end of this year that kicked off in January, so we feel good about the business in 2024 and presume we would get back to growth for the Lehigh business in 2024. Great, and just one kind of follow-up, you know, kind of building on what Janine was talking about, I'm just curious, you know, the bigger kind of needle movers, where things stand in terms of their willingness to, you know, maybe be a little more aggressive on, you know, call it less than buying to need and actually, you know, pre-booking and ordering a little more aggressive. Yeah, a good question, Jeff.

But the calculus, we're trying to do is does that mean.

They're going to what their behavior will shift back a little bit more normalized weather bookings.

40% of the product in order to now 160%.

Because we saw that kind of.

We saw that at once increase over the last couple of years is that as to Jason's point, the buyers are being more cautious and conservative. So we're trying to figure out what the new normal is.

But.

We'll wait and see.

Great I appreciate it I'll, let somebody else have a chance to ask a question best of luck.

Thanks, Jeff Thanks sure.

Ladies and gentlemen, as a reminder, so do you have a question. Please press the star followed by the one.

The next question comes from the line of Jonathan Komp with Baird.

Please go ahead.

Yes, hi, good afternoon. Thank you just two questions for me I think first looking at the the underlying revenue growth youre expecting for the year can you just give any more color.

By segment.

Jason S. Brooks: I think we have seen this loosen up a little bit. They are definitely being more active, not only in regards to at-once business but some booking business as well, or at least forecasting and giving us that information. So we've definitely seen that open up in the outdoor category, the farm and ranch category, and the western category, and so that's been a good sign. I will say, though, everybody still seems to be pretty cautious in what they're doing and how they're doing it, but it's definitely changed a little bit for us.

Segment or category, how youre thinking about about the growth on a relative basis based on what you see.

And then separately just on the operating margin commentary Tom could you maybe just.

Pacific So are using the right numbers, what what margin you see for 2024.

And any ability to.

Drive drive less deleverage, even on slower sales or maybe you could.

Quantify that incentive compensation headwind for this year that you've outlined thank.

Tom Robertson: Yeah, I think, Jeff, just to add, as we look at our bookings for the rest of the year, bookings are up, but the calculus we're trying to do is, does that mean their behavior will shift back to a little bit more normalized where they're booking 40% of the product and ordering at-once 60%? Because we saw an at-once increase over the last couple of years as, to Jason's point, buyers were being more cautious and conservative. So we're trying to figure out what the new normal is, but we'll wait and see.

Thank you.

Thanks, Sean here, so I'll kick off with a little bit of growth I think as we look at all the brands.

We would we.

We would look at them all about equal.

Except for the extra tough brand, we think there's probably a little bit more upside there but.

But the Rocky, Georgia, Durango brands, probably all pretty similar kind of growth rates and then our Lee hi.

Division I would say, we're anticipating or expecting a little bit higher.

Jeffrey Francis Lick: Great, I appreciate it. I'll let someone else have a chance to ask a question. Best of luck. Thanks, Jeff. Thanks, Jeff. Ladies and gentlemen, as a reminder, should you have a question, followed by the line, this question comes from Jonathan. Good afternoon. Thank you. Just two questions for me.

Growth rate there for 2024 as well.

Yes.

Add on to that.

For modeling purposes to help out the.

The $26 million that we caught out of nonrecurring revenue 23 of that wood.

Plenty of that would show up I am sorry in the wholesale segment, and so and so thats, where youll see that comparison.

With the other six being split between retail and contract manufacturing.

Jonathan Robert Komp: I think first, looking at the underlying revenue growth you're expecting for the year, can you just give any more color by segment or category on how you think about the growth on a relative basis based on what you see? And then separately, just on the operating margin commentary, Tom, could you maybe just be specific, so we're using the right numbers, what margin you see for 2024, and any ability to drive less de-leverage, even on slower sales, or maybe you could quantify the incentive compensation headwind for this year that you've held. Thank you. Thanks, Sean. Yeah,

Just also to give a little color from a from a.

Quarterly perspective.

That 26 million I would say about seven to 8 million comes out of Q1 and Q2.

$8 million in Q3, and then about $3 million in Q4, just so.

All the analysts and get there kind of other quarters lined up a little bit.

And then John the last question I believe you had was around margin operating expenses is that correct.

Operating margin for the year could you just clarify.

Jason S. Brooks: So I'll kick off with a little bit of growth. I think if we looked at all the brands, we would see them all about equal, except for the Extra Tough brand.

Operating margin roughly you are expecting.

Any ability to drive a lot.

Average on the flower sales growth or if you could give any more color on the G&A expenses, including incentive compensation reset. Thank you.

Jason S. Brooks: We think there's probably a little bit more upside there, but the Rocky, Georgia Durango, and Muck brands probably all have pretty similar growth rates. And then our Lehigh division, I would say we're anticipating or expecting a little bit higher growth rate there for 2024 as well. Yeah, I think to add on to that, just for modeling purposes to help out, you know, the $26 million that we caught out of non-recurring revenue, 23 of that would, Well, 20 of that would show up, I'm sorry, in the wholesale segment. And so that's where you'll see that comparison, with the other six being split between retail and contract manufacturing.

Yes, so I would say from a dollar standpoint, we're looking at a few million dollar increase from an operating expense down.

Perspective, our goal is going to be to try to keep that operating margin.

Flat with L. Y however, as we sit today, we've got to just slightly under.

2023 numbers.

Okay got it thanks again.

Thanks, Joe Thanks, Joe.

Your final question comes from the line of Bruce Geller.

Who is a private investor.

Please go ahead.

Hey, good afternoon gentlemen.

You may groups.

You made some really impressive progress this year on the balance sheet.

And I'm curious, where you think this can continue to go in 2024.

Tom Robertson: Just also to give a little color from a quarterly perspective, that $26 million, I would say about $7 to $8 million comes out of Q1 and Q2, $8 million in Q3, and then about $3 million in Q4, just so all the analysts can get their quarters lined up a little bit. And then John, the last question I believe you had was around operating expenses, is that correct? Just operating margin for the year. Could you just clarify what operating margin, roughly, you're expecting? ability to drive less leverage on the slower sales growth or if you could give any more color on G&A expenses, including the incentive.

Can you generate some incremental cash from inventory if so can you give some.

<unk> around that.

And in terms of debt pay down.

Similarly, I would imagine a lot of those proceeds would be channeled into debt paydown.

It seems to me based on some.

Preliminary numbers, you should be able to get your debt.

Debt to EBITDA ratio down below three and.

Current year.

And if thats the case.

There are also the prospects for.

Refinancing your debt, which.

It would I think further enhance the earnings growth considering you've.

You've still got about $2, a share and our interest expense locked up in the P&L.

Tom Robertson: Yeah, so I would say from a dollar standpoint, you know, we're looking at a few million dollar increase from an operating expense stamp perspective. Our goal is going to be to try to keep that operating margin flat with L.Y. However, as we said today, we've got it just slightly under 2023 numbers. Okay, thanks. Thanks, y'all.

Yes.

Bruce I'll take this one.

Yes, so from an inventory perspective, we've been targeting that 30% of sales as a long term number from an inventory perspective, so that would suggest that there's there's another $25 million to $30 million of inventory to come off we will see how this Canadian distribute distribution change that should help also helped that number.

Going forward and you're exactly right the working capital improvements there we will go to paying down debt and then and then your math on.

Bruce Galler: You made some really impressive progress this year on the balance sheet, and I'm curious where you think and generate guidance around that debt pay-down. Similarly, I would imagine a lot of those channeled into debt pay down. You know, it seems to me, based on some preliminary numbers, you should be able to get your... Debt-to-EBITDA ratio down below 3, this year. And if that's the case, what are also the prospects for?

On the leverage ratio is correct two we've got ourselves in kind of the.

The mid to two two range from a total leverage ratio standpoint, and so we'll continue to work with our lenders to try to find the right solution for them from a credit facility standpoint.

But I would anticipate that given where this leverage ratio is we'll be able to unlock some savings here in 2024 from an interest expense standpoint from where we sit today.

Tom Robertson: Refinancing Your Debt, which... further enhances the earnings growth considering it still got about $2 a share in interest locked up in the P&L. Yeah. Hey, Bruce, I'll take this one, Tom.

Okay. Thanks, I also had a question on the revenue guidance.

I think you mentioned $4 50 to $4 60, which would be.

Tom Robertson: Yeah, so from an inventory perspective, you know, we've been targeting that 30% of sales as a long-term number from an inventory perspective, so that would suggest that there's another $25, $30 million of inventory to come off. We will see how this Canadian distribution change, that should also help that number going forward, and you're exactly right. The working capital improvement there will go to paying down debt, and then your math on the leverage ratio is correct, too. We've got ourselves in kind of the mid-two range from a total leverage ratio standpoint, and so we'll continue to work with our lenders to try to find the right solution from a credit facility standpoint, but I would anticipate that, you know, given where this leverage ratio is, we'll be able to unlock some savings here in 20 Okay, thanks. I also had a question about the revenue guide. I think you mentioned 450 to 460, about flat-ish. I don't know why, but you also...

About flattish versus Earl Y, but you also.

Noted that you expected modest growth in the first half with accelerating growth in the second half. So there's a bit of a disconnect. There because you imply that there was going to be growth throughout the year, but the aggregate number does not imply any growth. So maybe I misheard that but if you could provide some clarification there.

It would be great.

Yeah, absolutely. So so the comment of the 3% to 4% growth is driving back to what we're considering kind of a new base, which was like $438 million, which was essentially this year's results minus that non reoccurring revenue of 26 million.

But we've talked about.

So if you were to look at that.

Hard to give a little color on each quarter on what that new base would be but I would say.

You would see kind of lower lower growth at 2% to 3% range in the first half of the year and then maybe the 4% to 5% in the second half of the year to get to that blended.

Three or four.

That we've guided to.

Tom Robertson: I noted that you expected modest growth in the first half with accelerating growth in the second half. Bit of a disconnect there because you implied that growth throughout the year, an aggregate number does not imply. So maybe I misheard that, but if you could provide some clarification. Yeah, absolutely. So the comment about the three to four percent growth is driving back to what we're considering kind of the new base, which was like $438 million, which was essentially this year's results minus that non-reoccurring revenue of $26 million that we talked about. And so if you were to look at that, and I tried to give a little color on each quarter on what that new base would be, but I would say you would see kind of lower growth in the two to three percent range in the first half of the year and then maybe the four to five percent in the second half of the year to get to that blended three to four that we guided to.

Okay. Thank you.

There are no further questions at this time I will now turn the.

Call back over to Jason Brooks for closing remarks. Please go ahead.

Thank you Eric I just wanted to thank the Rocky team one more time.

2023 was a incredibly complicated challenging year and our company and the people in the company really stepped up and did an amazing job navigating. It I know we are all excited about 2024 in the future Rocky brands and I look for.

We're working with you all to make that happen and I also just wanted to say thanks to our investors and their support in 2023 and look forward to.

Proving to you guys that we have a great 24, and the future ahead of us. So thank you all.

Tom Robertson: Thank you. There are no further questions at this time. I will now call back over to Jason Brooks.

Okay.

Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

Jason S. Brooks: Thank you, Eric. I just wanted to thank the Rocky team one more time. 2023 was an incredibly complicated, challenging year, and our company and the people in it really stepped up and did an amazing job navigating it. I know we are all excited about 2024 and the future of Rocky Brands, and I look forward to working with you all to make that happen. And I also just want to say thanks to our investors and their support in 2023 and look forward to proving to you guys that we have a great 24 in the future ahead of us. So, thank you all. Ladies and gentlemen, this concludes the conference call for today. Thanks for watching!

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