Rocky Brands, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Rocky Branch second quarter 2025 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, 2024. I'll now turn the conference over to Jason Brooks, Chief Executive Officer of Rocky Brands. Jason?

Thank you, Brendan. With me today is Tom Robertson, our Chief Operating and Chief Financial Officer. After our prepared remarks, we'll take your questions. We delivered very good Q2 results, significantly outperforming both last year and our own expectations through a strong execution across our diversified portfolio. High single-digit revenue growth and adjusted EPS that more than tripled to 55 cents per diluted share demonstrates the power of our multi-brand strategy and operational excellence. Three key drivers power this performance. First, broad-based revenue momentum. Multiple brands and channels contribute year-over-year growth with strong full-price selling driving a 230 basis point gross margin expansion despite challenging consumer conditions. Second, disciplined cost management. We controlled our fixed cost base effectively, delivering 59% operating income growth while reducing interest expense and debt levels year over year. Third, our outdoor category reassurance led by Extra Tough and Muck. Outdoor is re-emerging as a key growth engine alongside our traditional work and Western strengths. This outdoor transformation is particularly significant through the 2021 acquisition of the Extra Tough and Muck. We added two functional brands with deep fishing and farming routes, respectively. Now, especially with Extra Tough, We're building lifestyle components that broaden distribution and consumer reach. We are excited about the prospect of attracting more consumers to the brands and believe we are just starting to tap into an opportunity with a long runway of growth. Let me walk you through our Q2 brand performance. Extra Tough maintains its position as our fastest growing brand. building accelerating momentum across multiple quarters. We're working hard just to keep pace with demand and our expanding distribution network. U.S. wholesale significantly outpaced last year, increasing strong double digits with e-commerce growth equally as strong in the second quarter. EQ2 wins include sustained strength with authorized online partners, expansions into boot and western retailers, and new placement with prominent big box outdoor and fashion parts. Our fall-winter 25 lineup excites us. Fleece-lined ADBs, expanded tailgate collection styles, and a new Sesame Street children's line. Next, Muck delivered its best quarter-to-quarter comparison since 2023. Improved inventory positions, particularly in best-selling chore styles, combined with favorable weather drove strong performance. Men's business posted solid mid-single-digit gains with double-digit growth across the Upper Midwest, Northeast, and Southwest. Our women's business achieved strong double-digit increases versus Q2 2024. led by triple-digit growth in the Muckster 2 collection, including the Chicken Prince series. New digital advertising focus on working utility customers deliver our best campaign results in company history, driving brand awareness and e-commerce gains. Strategic partnerships include a collaboration with country star Dirk Bentley, furthering, amplifying our reach. Durango achieved a high single-digit growth driven by strong key account performance. Field accounts improved Q2 versus Q1, with momentum accelerating through May and June. Farm and Ranch remained consistent with steady replenishment, positioning us well for the second half of the year. Our inventory composition of new releases and legacy favorites continues delivering results. Georgia boot finished down modestly but showed progressive. Improvement throughout the quarter. Tariff-related timing shifts delayed a new fall product shipment by one month. Key accounts remained stable, driven by a large e-commerce partner and a working Western retailer chain returning to normal purchasing patterns. Farm and ranch softened due to Pacific Northwest weather impacts and inventory overstocks. while field accounts faced macroeconomic headwinds in May. The late quarter pickup should continue into the fall as our price point-focused offerings resonate broadly. Rocky work, outdoor, and western all grew for the first time in several quarters with outdoor and western double digits driven by new products, strong bestseller demand, and key partnership expansions. Profitability improved significantly through increased full-price selling versus the prior year's overstock focus. The work category strength came from online sales and improved farm store performance, plus continued expansion with national safety shoe distributors driving best-seller safety toe product. Outdoors showed encouraging signs despite lacking Q2 hunting seasonality, with hiking collections performing exceptionally well on our e-commerce site and partner platforms. Western work, Western hybrid products excelled, particularly in our Irons Call Safety Tow Western Pull-On at major industry outlets, supported by strong online and farm store performance. Commercial, military, and duty rebounded nicely, exceeding Q2 expectations After a difficult start, Public Service Division performed well, particularly USPS and the Code Red Fire Assortment. While commercial military segment momentum shifted as the U.S. government deployed allocated funds for the first time in months, we secured three substantial U.S. Navy orders, offsetting last year's contract sales. Looking ahead, we're optimistic about military prospects. Rocky Brands recently earned a USMC Hot Weather Boot Certification, enabling us to pursue large bid opportunities and provide individual marine sales going forward. In retail, our B2B Lehigh business grew mid-teens versus last year. As our sales team realignment reaches its one-year anniversary, new processes are generating sustainable double-digit growth. Customer acquisition and spending remain strong with improved subsidy utilization and higher average subsidy dollars year over year, largely offsetting supply chain and tariff pressure. Before turning to Tom, I want to thank the entire team for exceptional execution during a dynamic quarter. Despite the global tariff uncertainty and economic pressures, Our performance demonstrates our diversified portfolio's resilience. I'm particularly proud of how quickly we've adapted to the changing trade conditions, leveraging our Dominican Republic and Puerto Rican facility in implementing strategic sourcing changes that offset much tariff impact. While we remain appropriately cautious about the broader environment, our strategic positioning, manufacturing flexibility, and robust brand portfolio positions us well for continued growth and increased shareholder value. The momentum across key brands like ExtraTuff and Durango combined with our operational efficiencies and strong balance sheet gives us confidence to navigate the challenges while capitalizing on significant opportunities ahead. I will now turn the call over to Tom.