Rocky Brands, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome 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. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded, and we'll now turn the conference over to Brendan Frey of ICR.

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 1995. 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 31st, 2022. And I'll now turn the conference over to Jason Brooks, Chief Executive Officer of Rocky Brands. Jason?

Thank you, Brendan. With me on today's call is Tom Robertson. After Tom and I's 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, and 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 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. 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 an 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 want to spend a few minutes reviewing our fourth quarter sales performance by category and brands. 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. 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 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.