ROCKY BRANDS, INC.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
RCKY$51.34-1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001437749-26-014746
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001437749-26-025672
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 46 previous paragraphs and 61 current paragraphs.
20 unchanged; 20 reworded; 15 added; 6 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 8 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Our operating expenses as a percentage of net sales for the three and six months ending June 30, 2026 increased due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy during the second quarter of 2026.
Current report
Gross margin in the second quarter of 2026 was $60.8 million, or 51.4% of net sales, compared to $43.3 million, or 41.0% of net sales, in the second quarter of 2025. The increase in gross margin as a percentage of net sales wasprimarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026.
Current report
Operating expenses for the second quarter of 2026 were $41.1 million, or 34.7% of net sales, compared to $36.1 million, or 34.2% of net sales, for the second quarter of 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy in the second quarter of 2026.
Current report
Gross margin in the six months ended June 30, 2026 was $106.2 million, or 43.8% of net sales, compared to $90.3 million, or 41.1% of net sales, in the six months ended June 30, 2025. The increase in gross margin was primarily due to the recognition of actual and expected IEEPA tariff refunds, which lowered cost of goods sold in the second quarter of 2026.
Current report
Operating expenses for the six months ended June 30, 2026 were $82.9 million, or 34.2% of net sales, compared to $74.4 million, or 33.9% of net sales, for the six months ended June 30, 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy in the second quarter of 2026.
Current report
Income from operations for the six months ended June 30, 2026 was$23.3 million, or 9.6% of net sales, compared to $15.9 million, or 7.2% of net sales, in the year-ago period. The increasein income from operations was primarily driven by the increase in gross margin for the six months ended June 30, 2026 compared to the year-ago period.
Current report
Wholesale segment gross margin for the three months ended June 30, 2026 was $40.6 million, or 51.5% of net sales, compared to $29.5 million, or 40.3% of net sales, for the three months ended June 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales in thesecond quarter of 2026 compared to thesecond quarter of 2025 was primarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the current quarter, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs resulted in a reduction to Wholesale segment cost of goods sold of approximately $12.0 million in the second quarter of 2026. The increase in Wholesale segment gross margin resulting from the net tariff impact was partially offset by higher discontinued product sales as we continue to optimize our inventory position as well as additional promotions and discounts offered to several key customers in an effort to gain additional shelf space.
Current report
Operating expenses for the three months ended June 30, 2026 were$41.1 million, or 34.7% of net sales, compared to $36.1 million, or 34.2% of net sales, for the three months ended June 30, 2025. The increase in operating expenses as a percentage of net sales was due to an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy filing in the second quarter of 2026.
Current report
Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025
Current report
Wholesale segment net sales for the six months ended June 30, 2026 were$157.2 million compared to $147.9 million for the six months ended June 30, 2025. The increase in Wholesale segment net sales was due to price increases that went into effect in the third quarter of 2025, and increased demand across several key styles and brands. As part of a strategic initiative, we continue to build upon the lifestyle component of our outdoor category to broaden our distribution and consumer reach. Additionally, we offered select incentives to capture additional shelf space with key customers, and opportunistic selling of more discontinued styles in this year’s second quarter. The combination of these factors helped drive increased volume in the first half of 2026 compared to the prior year period.
Current report
Wholesale segment gross margin for thesix months ended June 30, 2026 was $67.6 million, or 43.0% of net sales, compared to $59.6 million, or 40.3% of net sales, for thesix months ended June 30, 2025. The increase in Wholesale segment gross margin as a percentage of net sales in the first half of 2026 compared to the first half of 2025 was primarily due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs for the six months ended June 30, 2026 resulted in a net impact of $6.3 million as a reduction to costs of goods sold to our Wholesale segment. Additionally, the increase in Wholesale segment gross margin as a percentage of net sales was also due to a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. The increase in Wholesale segment gross margin as a percentage of net sales in the first half of 2026 compared to the prior year period was partially offset by higher discontinued product sales as we continue to optimize our inventory position as well as additional promotions and discounts offered to several key customers in an effort to gain additional shelf space.
Current report
Retail segment gross margin for the six months ended June 30, 2026 was$38.0 million, or 48.2% of net sales, compared to $30.2 million, or 45.5% of net sales, for the six months ended June 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was due to the recognition of actual and expected IEEPA tariff refunds, which reduced cost of goods sold in the second quarter of 2026, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs for the six months ended June 30, 2026 resulted in a net impact of $1.5 million as a reduction to cost of goods sold to our Retail segment gross margin. Additionally, the increase in Retail segment gross margins as a percentage of net sales was also attributable to price increases as well as a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio.
Current report
Contract Manufacturing gross margin for thesix months ended June 30, 2026 was$0.6 million, or 9.3% of net sales, compared to $0.5 million, or 9.2% of net sales, for thesix months ended June 30, 2025.
Current report
Operating expenses for the six months ended June 30, 2026 were$82.9 million, or 34.2% of net sales, compared to $74.4 million, or 33.9% of net sales, for the six months ended June 30, 2025. The increase in operating expenses was due to higher logistics costs, primarily outbound freight, associated with the increase in Retail sales as well as an approximate $1.1 million write-off of accounts receivable associated with a customer bankruptcy filing in the second quarter of 2026.
Current report
Financing Activities. Net cash used in financing activities for thesix months ended June 30, 2026 was $5.2 million, and net cash provided by financing activities for the six months ended June 30, 2025 was $0.9 million. The net use of cash for the current year period was primarily due to dividend payments and repurchases of common stock. The net source of cash for the six months ended June 30, 2026 primarily related to proceeds from our revolving credit facility offset by payments on our term loan and dividend payments.
Removed paragraphs (6)
Previous report
Our operating expenses as a percentage of net sales for the three months ending March 31, 2026 was consistent with that of the prior year period.
Previous report
Gross margin in the first quarter of 2026 was $45.4 million, or 36.5% of net sales, compared to $47.0 million, or 41.2% of net sales, in the first quarter of 2025. The 470-basis point decrease in gross margin was primarily driven by increased sourcing variances, mainly higher tariffs, in the first quarter of 2026 compared to the first quarter of 2025.
Previous report
Operating expenses for the first quarter of 2026 were $41.8 million, or 33.6% of net sales, compared to $38.3 million, or 33.6% of net sales, for the first quarter of 2025.
Previous report
Wholesale gross margin for the three months ended March 31, 2026 was $27.0 million, or 34.4% of net sales, compared to $30.1 million, or 40.3% of net sales, for the three months ended March 31, 2025. The lower Wholesale gross margin in the first quarter of 2026 compared to the first quarter 2025 was due to higher tariff-related costs offset by tariff-related price increases and mitigation actions taken over the past twelve months to diversify our sourcing and leverage our own manufacturing facilities. The unfavorable tariff costs were also partially offset by an on-going favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. Our rubber boots products typically yield higher gross margins than other products within our brand portfolio.
Previous report
Operating expenses for the three months ended March 31, 2026 and March 31, 2025 were $41.8 million and $38.3 million, respectively, or 33.6% of sales. The increase in operating expenses was due to higher logistics costs associated with the increase in Retail sales.
Previous report
Financing Activities. Net cash used in financing activities for thethree months ended March 31, 2026 and 2025 was$2.0 million and $1.7 million, respectively. The net use of cash for both periods primarily related to the payment of dividends of $1.2 million for the three months ended March 31, 2026 and 2025.
Reworded paragraphs (20)
Previous wording
Our business is subject to a highly evolving and everchanging macroeconomic environment, including changes in tariffs, taxes and industry changes. 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 Inte rnational Emergency Economic Powers Act ("IEEPA"), significant additional tariffs were imposed on products imported from various countries, including those countries where we primarily source our products. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the IEEPA and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency ("CBA") to suspend collection of the invalidated tariffs and to establish a process to refund IEEPA tariffs previously collected. As a result of this ruling, we may be eligible to receive refunds of tariffs previously paid on qualifying imports. We have paid approximately $20.5 million in tariffs for products that were subject to the invalidated IEEPA tariffs. Beginning in April 2026, we began filing refund claims with CBP related to eligible IEPPA tariff payments made. There can be no guarantee that a refund, if received, will equal the full amount of IEEPA tariffs paid, and any refund may be subject to further legal and regulatory developments. As a result of the uncertainty, we have not recorded a receivable related to the potential recovery of IEEPA tariffs paid as of March 31, 2026.
Current wording
Our business is subject to a highly evolving and everchanging macroeconomic environment, including changes in tariffs, taxes and industry changes. 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 Inte rnational Emergency Economic Powers Act ("IEEPA"), significant additional tariffs were imposed on products imported from various countries, including those countries where we primarily source our products. In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the IEEPA and in March 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection Agency to suspend collection of the invalidated tariffs and to establish a process to refund certain IEEPA tariffs previously collected. As a result of this ruling, we are eligible to receive refunds of tariffs previously paid on qualifying imports, including interest. We have paid approximately $20.5 million in tariffs for products that were subject to the invalidated IEEPA tariffs. We applied the loss recovery model and determined the expected receipt of the refund of the previously paid IEEPA tariffs is probable. Accordingly, we recognized a benefit of $18.0 million as a reduction to cost of goods sold within the accompanying Unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026. Additionally, $2.5 million has been recorded as a reduction of inventory within the accompanying Unaudited Condensed Consolidated Balance Sheet as of June 30, 2026, and will be recognized as a reduction to cost of goods sold as the inventory is sold. As of June 30, 2026, we have received $3.7 million in refunds and recorded $16.8 million of outstanding IEEPA tariff receivables, which is included in "other receivables" within the accompanying Unaudited Condensed Consolidated Balance Sheet. Subsequent to June 30, 2026, we have received an additional $8.2 million of the IEEPA tariff receivable.
Previous wording
Additionally, following the Supreme Court's ruling invalidating the IEEPA tariffs, the U.S. imposed a temporary 10% general tariff under Section 122 of the Trade Act of 1974. There remains substantial uncertainty regarding the potential changes or pauses to existing and newly announced tariffs, tariff levels, and whether additional tariffs or other reciprocal actions may be imposed, modified, or suspended. We have implemented, and plan to continue to implement, as needed, various mitigation strategies including adjusting the prices of our products, adjusting the countries from which we source our products and further leveraging our own manufacturing facilities in the Dominican Republic and Puerto Rico. Proposed 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 resulting impacts it could adversely affect our business, financial condition, and results of operation.
Current wording
There remains substantial uncertainty regarding the potential changes or pauses to existing and newly announced tariffs, tariff levels, and whether additional tariffs or other reciprocal actions may be imposed, modified, or suspended. We have implemented, and plan to continue to implement, as needed, various mitigation strategies including adjusting the prices of our products, adjusting the countries from which we source our products and further leveraging our own manufacturing facilities in the Dominican Republic and Puerto Rico. Proposed or enacted tariffs and changes to U.S. trading policies may be reinstituted, paused, removed, or changed at any time and to the extent we are unable to successfully mitigate any negative resulting impacts, our business, financial condition, and results of operation could be materially and adversely affected.
Previous wording
During the first quarter of 2026, we experienced an increase in net sales over the first quarter of 2025. This increase was attributable to an increase in net sales across all three of our reportable segments, Wholesale, Retail, and Contact Manufacturing. We continue to benefit from the strength and growth of our Retail segment with the third consecutive quarter of growth in our Retail segment net sales. Growth in our Retail segment was driven by increases across all of our Retail selling channels. The increase in net sales on our e-commerce websites and third-party marketplace platforms was driven by a continued focus on our digital marketing and expansion into new marketplaces. The increase in net sales in our Lehigh CustomFit business was attributed to expanding our customer base and product offerings. We saw a decrease in gross margin as a percentage of sales in our Wholesale and Retail segments as a result of increased product costs due to elevated tariff costs recognized during the quarter partially offset by tariff-related price increases.
Current wording
During the second quarter of 2026, we experienced an increase in net sales over the second quarter of 2025. This increase was attributable to an increase in net sales across all three of our reportable segments, Retail, Wholesale, and Contact Manufacturing. The price increase implemented in the third quarter of 2025 allowed us to experience steady growth during the first half of 2026 over the first half of 2025. Our Retail segment continues to be our fastest growing reportable segment, with double digit growth in the first and second quarters of 2026 over the prior year periods, driven by growth across all of our Retail selling channels. The increase in net sales on our e-commerce websites and third-party marketplace platforms was driven by a continued focus on our digital marketing and expansion into new marketplaces. The increase in net sales in our Lehigh CustomFit business was attributed to expanding our customer base and product offerings. We saw an increase in gross margin as a percentage of sales in our Wholesale and Retail segments as a result of the recognition of actual and expected IEEPA tariff refunds in the second quarter of 2026, which reduced cost of goods sold.
Previous wording
Interest expense declined for the three months ending March 31, 2026 compared to the same period in 2025 due to continued debt repayments over the past twelve months, which have reduced the overall outstanding principal balances, as well as a decrease in interest rates.
Current wording
Interest expense declined for the three and six months ending June 30, 2026 compared to the same periods in 2025 due to continued debt repayments over the past twelve months, which have reduced the overall outstanding principal balances, as well as a decrease in interest rates.
Previous wording
FIRST QUARTER 2026 FINANCIAL HIGHLIGHTS COMPARED TO FIRST QUARTER 2025
Current wording
SECOND QUARTER 2026 FINANCIAL HIGHLIGHTS COMPARED TO SECOND QUARTER 2025
Previous wording
Net sales increased to $124.4 million in the first quarter of 2026 compared to $114.1 million in the first quarter of 2025. The increase in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Current wording
Net sales increased to $118.4 million in the second quarter of 2026 compared to $105.6 million in the second quarter of 2025. The increase in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Previous wording
Income from operations for the first quarter of 2026 was $3.6 million, or 2.9% of net sales, compared to $8.7 million, or 7.6% of net sales, in the year ago period. The decrease in income from operations was primarily driven by the decrease in gross margin for the three months ended March 31, 2026, compared to the year ago period.
Current wording
Income from operations for the second quarter of 2026 was$19.7 million, or 16.6% of net sales, compared to $7.2 million, or 6.8% of net sales, in the year-ago period. The increase in income from operations was primarily driven by the increase in gross margin for the three months ended June 30, 2026 compared to the year-ago period.
Previous wording
Wholesale net sales for the three months ended March 31, 2026 were $78.4 million compared to $74.8 million for the three months ended March 31, 2025. The increase in Wholesale net sales was due to increased demand across several key styles and brands coupled with a tariff-related price increase. Additionally, as part of a strategic initiative, we continued to build upon the lifestyle component of our outdoor category to broaden our distribution and consumer reach.
Current wording
Wholesale segment net sales for the three months ended June 30, 2026 were$78.8 million compared to $73.1 million for the three months ended June 30, 2025. The increase in Wholesale segment net sales was due to increased demand across several key styles and brands coupled with price increases implemented in the third quarter of 2025. As part of a strategic initiative, we continued to build upon the lifestyle component of our outdoor category to broaden our distribution and consumer reach. Additionally, we offered select incentives to capture additional shelf space with key customers, and opportunistic selling of more discontinued styles in this year’s second quarter. The combination of these factors helped drive increased volume in the second quarter of 2026 compared to the prior year period.
Previous wording
Retail net sales for the three months ended March 31, 2026 were$42.7 million compared to $36.6 million for the three months ended March 31, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the first quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to increased presence within the marketplace space as well as price increases.
Current wording
Retail segment net sales for the three months ended June 30, 2026 were$36.2 million compared to $29.7 million for the three months ended June 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the second quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to increased presence within the marketplace space as well as price increases.
Previous wording
Contract Manufacturing net sales for the three months ended March 31, 2026 were$3.3 million compared to $2.7 million for the three months ended March 31, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Current wording
Contract Manufacturing net sales for the three months ended June 30, 2026 were$3.3 million compared to $2.8 million for the three months ended June 30, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Previous wording
Retail gross margin for the three months ended March 31, 2026 was $18.2 million, or 42.6% of net sales, compared to $16.7 million, or 45.7% of net sales, for the three months ended March 31, 2025. The decrease in Retail gross margin as a percentage of net sales was attributable to higher tariff-related costs offset by price increases. The unfavorable tariff costs were also partially offset by an on-going favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. Our rubber boots product typically yield higher gross margins than other products within our brand portfolio.
Current wording
Retail segment gross margin for the three months ended June 30, 2026 was$19.9 million, or 54.8% of net sales, compared to $13.5 million, or 45.2% of net sales, for the three months ended June 30, 2025. The increase in Retail segment gross margin as a percentage of net sales was primarily due to the recognition of actual and expected IEEPA tariff refunds, which lowered cost of goods sold in the current quarter, partially offset by tariff-related costs and sourcing variances. The net impact of the aforementioned tariff refunds and tariff costs resulted in a reduction to Retail segment cost of goods sold of approximately $3.0 million in the second quarter of 2026. Additionally, the increase in Retail segment gross margins as a percentage of net sales was also attributable to price increases implemented in the third quarter of 2025 as well as a favorable shift in our branded sales mix, with our rubber boot brands delivering stronger growth relative to the rest of the brands in our portfolio. Our rubber boots product typically yield higher gross margins than other products within our brand portfolio.
Previous wording
Contract Manufacturing gross margin for the three months ended March 31, 2026 was $0.3 million, or 9.2% of net sales, compared to $0.2 million, or 5.8% of net sales, for the three months ended March 31, 2025. The increase in gross margin was driven by increased economies of scale at our Puerto Rico manufacturing facility as we increased production there.
Current wording
Contract Manufacturing segment gross margin for the three months ended June 30, 2026 was$0.3 million, or 9.3% of net sales, compared to $0.3 million, or 12.4% of net sales, for the three months ended June 30, 2025. The decrease in gross margin as a percentage of sales was due to reduced economies of scale at our Puerto Rico manufacturing facility.
Previous wording
Interest Expense and Other - net for the three months ended March 31, 2026 was $2.0 million compared to $2.4 million in the year ago period. The decrease in interest expense was due to lower debt levelsas well as a decrease in interest rates.
Current wording
Interest Expense and Other - net for the three months ended June 30, 2026 was $2.0 million compared to $2.5 million in the year-ago period. The decrease in interest expense was due to lower debt levels.
Previous wording
The decrease in our effective tax rate in the first quarter of 2026 compared to the year ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Current wording
The decrease in our effective tax rate in the second quarter of 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.
Previous wording
Our principal sources of liquidity are our income from operations, as well as access to the borrowing capacity 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 March 31, 2026, we maintained cash and cash equivalents of $1.7 million and had $48.5 million of availability under our ABL Facility. Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities.
Current wording
Our principal sources of liquidity are our income from operations, as well as access to the borrowing capacity 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 June 30, 2026, we maintained cash and cash equivalents of $2.6 million and had $46.3 million of availability under our ABL Facility. Our primary ongoing operating cash flow requirements are for inventory purchases and other working capital needs, capital expenditures, and payments on our credit facilities.
Previous wording
In addition to our ABL Facility with outstanding borrowings of $99.1 million as of March 31, 2026, we also have a Term Facility with outstanding borrowings of $24.7 million as of March 31, 2026. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments and the amount of share repurchases of common stock. As of March 31, 2026, we were in compliance with such covenants and restrictions under the ABL Facility and Term Facility. We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity.
Current wording
In addition to our ABL Facility with outstanding borrowings of $101.3 million as of June 30, 2026, we also have a Term Facility with outstanding borrowings of $22.6 million as of June 30, 2026. Our ABL Facility and Term Facility require us to maintain a minimum fixed charge coverage ratio, as defined in the ABL Agreement. Additionally, the ABL Facility and Term Facility contain restrictions on the amount of dividend payments and the amount of share repurchases of common stock. As of June 30, 2026, we were in compliance with such covenants and restrictions under the ABL Facility and Term Facility. We may utilize portions of our excess cash to prepay certain amounts of long-term debt prior to maturity.
Previous wording
*Operating Activities.*Net cash provided by operating activities was $1.9 million and $1.2 million for thethree months ended March 31, 2026 and 2025, respectively. Adjusting for noncash items, net income provided a cash in-flow of $5.5 million and $8.8 million for thethree months ended March 31, 2026 and 2025, respectively. The net change in working capital and other assets and liabilities resulted in cash used by operating activities of $3.6 million and $7.6 million for thethree months ended March 31, 2026 and 2025, respectively.
Current wording
*Operating Activities.*Net cash provided by operating activities was $9.7 million and $2.0 million for thesix months ended June 30, 2026 and 2025, respectively. The increase in cash provided by operating activities was primarily due to an increase in net income resulting from an increase in net sales over the prior year period as well as IEEPA tariff refunds received during the second quarter of 2026. The net change in working capital and other assets and liabilities resulted in cash used by operating activities of $14.5 million and $14.2 million for thesix months ended June 30, 2026 and 2025, respectively.
Previous wording
During the three months ended March 31, 2026, the net change in working capital was primarily impacted by an increase in accounts payable and a decrease in accrued expenses. The increase in accounts payable resulted in a source of cash of $6.8 million and the decrease in accrued expenses resulted in a use of cash of $7.0 million. The increase in accounts payablefor thethree months ended March 31, 2026 was a resultof the timing of payments to suppliers and an increase in inventory purchases in the first quarter of 2026 compared to fourth quarter of 2025. The decrease in accrued expensesfor thethree months ended March 31, 2026 was a result of the tariff reductions imposed during the first quarter of 2026. During thethree months ended March 31, 2025, the net change in working capital was primarily impacted by an increase in inventory and accounts payable. An increase in inventory resulted in a use of cash of $8.8 million and an increase in accounts payable resulted in a source of cash of $5.6 million. The increase in inventory and accounts payable was the result of a strategic move to accelerate inventory receipts in March to avoid higher tariffs that did not go into effect until April 2025.
Current wording
During the six months ended June 30, 2026, the net change in working capital was primarily impacted by an increase in accounts receivable and a decrease in accrued expenses. The increase in accounts receivable and the decrease in accrued expenses resulted in a use of cash of $16.5 million and $5.0 million, respectively. The increase in accounts receivable was primarily due to the recognition of the IEEPA tariff refunds receivable in the second quarter of 2026. The decrease in accrued expenses for the six months ended June 30, 2026 was a result of a decrease in tariff costs as a result of the U.S. Supreme Court's ruling to invalidate certain IEEPA tariffs in the first quarter of 2026. During thesix months ended June 30, 2025, the net change in working capital was primarily impacted by an increase in inventory resulting in a use of cash of $20.1 million. The increase in inventory was a result of the additional tariffs imposed during 2025 as well as increased purchases in order to meet estimated demand in the second half of 2025.
Previous wording
Investing Activities. Net cash used in investing activities for thethree months ended March 31, 2026 and 2025 was $1.1 million and $0.7 million, respectively. The use of cash in both periods was a result of capital expenditures for our manufacturing operations and information technology.
Current wording
Investing Activities. Net cash used in investing activities for thesix months ended June 30, 2026 and 2025 was$4.8 millionand $3.9 million, respectively. The use of cash in both periods was a result of capital expenditures for our manufacturing operations, distribution center, and information technology.
Previous wording
On February 24, 2026, we announced a share repurchase program of up to $7,500,000 of the Company's outstanding common stock, no par value per share.
Current wording
On February 24, 2026, we announced a share repurchase program of up to $7,500,000 of the Company's outstanding common stock, no par value per share. As of June 30, 2026, we repurchased 53,664 shares of common stock under our authorized share repurchase program. The shares were purchased at an aggregate cost of $2.0 million and an average price of $37.09 per share.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
FIRST HALF OF 2026 FINANCIAL HIGHLIGHTS COMPARED TO FIRST HALF OF 2025
Current report — wording carried from elsewhere
Net sales increased to $242.8 million in the six months ended June 30, 2026 compared to $219.7 million in the six months ended June 30, 2025. Theincrease in net sales in the current year quarter compared to the prior year quarter was due to an increase in net sales across all of our reportable segments: Wholesale, Retail, and Contract Manufacturing.
Current report — wording carried from elsewhere
Retail segment net sales for thesix months ended June 30, 2026 were$78.9 million compared to $66.4 million for thesix months ended June 30, 2025. The increase was attributed to increases in our owned e-commerce website net sales, our Lehigh CustomFit business, and third-party marketplace net sales. We upgraded our e-commerce platform during the third quarter of 2025 and have increased our investments in digital advertising, driving more traffic to our website and increasing our net sales in the second quarter of 2026 compared to the prior year period. We experienced an increase in our Lehigh CustomFit business as we continue to expand our customer base and increase product offerings. The increase in third-party marketplace platforms was attributed to increased presence within the marketplace space as well as price increases.
Current report — wording carried from elsewhere
Contract Manufacturing net sales for thesix months ended June 30, 2026 were$6.6 million compared to $5.5 million for thesix months ended June 30, 2025. The increase in Contract Manufacturing net sales was due to increased sales to the U.S. Military.
Current report — wording carried from elsewhere
Interest Expense and Other - net for thesix months ended June 30, 2026 was $4.0 million compared to $4.9 million in the year-ago period. The decrease in interest expense was due to lower debt levels.
Current report — wording carried from elsewhere
The decrease in our effective tax rate in thesix months ended June 30, 2026 compared to the year-ago period was primarily due to the mix of earnings between the United States and our international subsidiaries.