Rocky Brands, Inc.

and military sales increased 15.7% to $4.4 million. The first quarter of this year includes approximately $6.5 million in sales from the acquired brands, with approximately $5.5 million falling in our wholesale segment and $1 million in retail. Gross profit in the first quarter increased 81.9% to $35.1 million, or 40.1% of sales compared to 19.3 million or 34.7% of sales in the same period last year. This year's gross margin includes a $300,000 inventory purchase accounting adjustment, while last year's gross margin includes approximately 1 million in expenses related to the temporary closure of our manufacturing facilities due to COVID-19. Excluding these items, gross margin for the first quarter of this year and last year were 40.5% and 36.4% respectively. The 410 basis point increase was primarily attributable to higher margins in all three segments with the biggest gain in wholesale as we benefited from increased manufacturing synergies on higher volumes, experienced less promotional selling, and we're up against an easier comparison due to higher tariffs in the year-ago quarter. Gross margins by segment were as follows. Wholesale, 37.6%. Retail, 48.1%. And military, 29.9%. Operating expenses were 28.6 million, or 32.6% of net sales in the first quarter of 2021, compared to 17.8 million, or 32% of net sales last year. Included in this year's first quarter were approximately $5.2 million of acquisition-related expenses. Excluding these expenses, operating expenses as a percent of net sales improved 530 basis points to 26.7%, driven by leverage on higher sales. Income from operations increased 335% to 6.6 million, or 7.5% of net sales, compared to $1.5 million or 2.7% of net sales in the year-ago period. Adjusted operating income, which excludes the inventory purchase accounting adjustment and acquisition-related expenses in Q1 of 2021 and the expenses from the manufacturing facility shutdowns in Q1 of last year, was $12.1 million or 13.8% of net sales versus $2.5 million or 4.5% of net sales, respectively. Net income for the quarter increased 278.1% to $4.5 million, or $0.61 per diluted share, compared to net income of $1.2 million, or $0.16 per diluted share in the year-ago period. Adjusted net income for the first quarter of the year was $8.7 million, or $1.19 per diluted share, an increase of 344% compared to adjusted net income of $2 million, or $0.27 per diluted share last year. Turning to our balance sheet, we ended 2020 in a very strong position, highlighted by cash and cash equivalents of $28.4 million and no debt. During the first quarter, we borrowed approximately $190 million and utilized $20 million in cash to fund the acquisition. As of March 31, 2021, cash and cash equivalents stood at $8.9 million, and our debt totaled $186.3 million, consisting of our $130 million senior secured term loan facility and borrowings under our $150 million senior secured asset-backed credit facility. With regard to our outlook, we want to provide some updated thoughts on 2021. As a reminder, we said in the Q4 call in February that we expected full-year revenue for Rocky Brands on a standalone basis to increase in the mid-single-digit range. However, based on the strong first quarter performance combined with a very good start to the second quarter, we are now expecting rocky standalone revenue for the full year to increase approximately 20% over 2020. With respect to the acquired business, as we previously disclosed, collectively the new brands generated annual revenue of approximately $205 million in 2020. For 2021, we are also forecasting growth of approximately 20%, of which we'll recognize roughly 80% based on when the transaction closed. In terms of margins, we're expecting consolidated gross margins for 2021 to be approximately 40%, as the combined businesses benefit from increased economies of scale and higher gross margins for the acquired brands to help offset headwinds from increased shipping costs. That concludes our prepared remarks. Operator, we are now ready for questions.

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Yeah, great. Hi, thank you. Maybe if I could start, you know, looking at the base business and the acceleration you've seen in the first quarter, could you maybe just share more where you've been surprised in terms of the sources of the upside? And I know, Tom, it sounds like maybe that's continuing into the second quarter, but any thoughts on how you expect some of the strong performance at the category level to play out going forward here.