ROCKY BRANDS, INC. — Call Transcript 2026

Okay, we're going to get started now. Good afternoon. I'm John McNamara with Three Part Advisors. Our next presentation is Rocky Brands. Rocky Brands designs, manufactures, and markets premium work, outdoor, and Western footwear and apparel through a portfolio of heritage brands. The stock trades on the Nasdaq under the symbol RCKY. With us from management are Jason Brooks, President and Chief Executive Officer, and Tom Robertson, Chief Operating and Chief Financial Officer. Who's going to take over? Tom? I'm going to take over, yeah. It's all yours. Thank you, John. Appreciate it. Thank you all for being here. Appreciate that. Speak to the- You want me up there? the internet audience. I got to go up here. Wow. Not used to having a mic in front of me. Again, thank you for being here. We'll go over some slides and then, I guess, John, if it's okay, do questions at the end? Awesome. Thank you very much. I've done. Get out. Safe harbor statement, I'm sure everybody here knows what this is. We'll jump in, talk a little bit about the history of the company, the portfolio brands, 25 sales mix, brand overviews, distribution, and manufacturing, a little bit on the financial highlights, investment, and contact information as well. Rocky Brands started back in 1932. I promise I won't go through every year, but 1932 is when the company started in Nelsonville, Ohio. In the 1980s, we built our own factories in the Dominican Republic and also in Puerto Rico. We still have those factories today, and they still produce product for us. We did go public in 1993, and in 2005, we did an acquisition of EJ Footwear or Endicott Johnson Footwear, which was the Durango, the Georgia Boot brand, and the Lehigh business, which we'll talk a little bit about later. In 2017, we had a leadership change, and that was when I was fortunate enough to move into the CEO role, this is going on my 10th year, which is kind of crazy to think about. In 2021, we did another acquisition of the Muck brand, XTRATUF, NEOS, Servus, and Ranger. We have since sold off the NEOS and the Servus brand in 2023. We break out the segments in wholesale, retail, and contract manufacturing, and as I mentioned, we own manufacturing in the U.S., we have the Dominican, and with the acquisition in 2021 came a factory in mainland China as well. Again, these are the strong brands that we have. We've talked a little bit about them already. This slide gives you a little bit of information about the company. Wholesale is 66%. Retail, that would include our DTC business, our own websites, but the retail also would encompass our Lehigh business, which we'll talk a little more about why we call that retail. The contract manufacturing today is 2% of the business, and that fluctuates with the U.S. government, needing military boots or not needing. This will give you a little breakdown on the brands. Work is our biggest category, and pretty much every brand falls in the work category. Outdoor, I want to clarify for us, outdoor is more the fishing, hunting outdoor segment, not as much around the hiking section. We specify that very differently. Western boots, Durango's the largest Western category that we have, and Rocky also makes up a little bit of that. Service is going to be your police, fire departments. We do footwear for all those areas. Apparel, we have a little bit of apparel, like I said, it's 2% of the business. Definitely somewhere we could focus on and grow on, and we'll continue to do that. A little bit about Muck. The imagery will just give you a little bit about the target audience that we're going after here, and think about farm and ranch, think about people who have big farms but have their own backyard farm. These boots will really accommodate in all those sections. These are just some of the three examples of our top sellers, and there to the right, you'll see some of the key customers like Tractor Supply, Bass Pro, depending on if it's more of the work category or if it's more of that hunting category. Muck sales from a wholesale standpoint is about 75% of our business. Again, back to those customers, the Tractors of the world, the Bass Pros of the world, but we do do about 25% of our business DTC there on our own website, muckboots.com. Jumping into Rocky, as I mentioned, we do kind of all categories here. The upper left-hand corner is going to be what we call is commercial military. I talked a little bit about our U.S. government contracts. This is going to fall under just wholesale. What we do here is design, develop better boots than what the government is giving to our military, and we sell these in retail stores like AAFES is one of the largest retailers around the world there on U.S. bases, right? They sell everything to the people that are on the bases. They would go in there and purchase those boots directly for themselves. The police boots, you can see there, the black, a little hunting boot, just a brown Gore-Tex casual kind of work shoe. About 80% of our business is done through wholesale on Rocky and about 20% direct on the rockyboots.com website. Georgia, I like to talk about, this is our blue-collar working guy, around more rural than in the cities. Kind of an opportunity for us if we can get a little more penetration in places like New York City. This is the top three kind of styles that we have here. Our wedges are a really popular product line for us. The shoe all the way to the right is called the Romeo, and that is very big out in the Northwest. That shoe's been in the line about 25 years, hasn't changed a bit. Same leather, same outsole, everything, which I personally really like, just that kind of everyday thing. Boot Barn's a big customer. Tractor Supply as well is a big customer. Out in the West Coast, Coastal is a big farm and ranch retailer out there. Georgia Boot is about 86% wholesale, 14% online. One of the things that we think here is if you think about that customer base I just talked about, like that blue-collar guy, he's definitely coming and doing more shopping online, he's the kind of guy, he got done working that day, his boot's leaking, he needs to go to the store and get a new pair of boots for work tomorrow. A little bit less there, but we are target marketing them and trying to increase our DTC business. Durango is our Western-influenced product. The flag boot there in the middle has been one of our best-selling boots for probably 15 years. Yeah, close. Yeah. Cavender's, a big Western retailer down in Texas. Boot Barn does really well with the Durango brand also. Durango, again, about 89% wholesale, 11% DTC. Again, if you think about the guy wearing that, they're probably going to be needing those boots a little bit quicker than waiting two days to get them delivered. Trying to push more business to our own websites, and we'll continue to do that. XTRATUF is our Alaska-built fishing boot, and this is actually our fastest-growing brand right now and has been for probably the last four or five years. The boot all the way to the left is the Legacy boot. That's where the brand really started in Alaska. If you've ever seen the TV show "Deadliest Catch," all of the fishermen are wearing that boot on that show. They just buy it. We don't sponsor it. We don't do anything to get it. What they would do normally after the fishing season in Alaska, they would come maybe to Florida, and they would bring this boot, but they would cut it down. Just to the right of it, the brown one, that's where the ADV kind of came from. Very functional, good use for boating and fishing, but now we're seeing it expand into different areas. Moms and kids are buying into it. College students are buying into it. The great thing about XTRATUF is it's really a coastal brand right now, but we're starting to see it come inwards quite a bit. One of the areas we saw last year was in the ski areas, fleece-lined ADVs have become very popular. You take your ski boots off, you slip your ADVs on, you're in a good place. 73% wholesale, about 27% DTC. Again, if you think about the brand and what it offers, there's more women buying this brand as well. Online is working better in that area. The need's not quite as urgent to have that boot today. I'm going to have Tom come up and do this. He loves Lehigh. Yeah. Lehigh CustomFit, for those of you who don't know, it's a really unique business. What we do is we enter into relationships with employers that have some type of safety footwear requirement. In those situations, a lot of times, those employers are actually providing a subsidy or voucher for the footwear for their employees. The thing I love most about this business is that it's like an annuity in footwear, every year, we have these employers, they give the subsidy, and the employees almost always spend their subsidy. The unique thing about us, this business has evolved over the years. It started selling trucks, pulling up to manufacturing facilities, selling the inventory to the employees. We used to have 120 trucks on the road 15 years ago. The evolution is we took it all digitally, right? Selling product through trucks is a really bad way of selling boots, right? The inventory is limited to what's on the truck. Having the trucks just drive around, the cost associated with that, the collection of cash, returns were a nightmare. This industry is built for selling shoes or selling online, the beauty of it is we sell our brands, but we also sell third-party brands. We sell Timberland, Ariat, Justin, over 65 different brands. One of the great things about this business is it's very capital light, right? About 50% of this product that we sell, we never actually physically touch. We just act as the conduit or the marketplace for those employees to buy the product. One of the things we've been experimenting with, last year, we introduced prescription eyeglasses to the program. It bolts right onto the proprietary platform that we built for this. Again, that's a contactless sale for us, right? They upload their prescriptions, the eyeglass manufacturer, Bollé, sends the prescription directly to the customer, we make a good margin on it. The exciting part about this is that we're going to be moving into apparel here in the fall. The idea around that, we have customers already asking for it, right? The apparel subsidy program is much larger than the footwear. It's somewhere between eight and 10 times the footwear voucher, we think this could be a good growth area for us. A lot of our customers already for Lehigh, the employees are already wearing a shirt with the company logo on it, fire-resistant clothing, things such as that. We think this will be an easy bolt-on. We've done the work on the technology side to get this in place. Now we're going to be implementing getting the equipment to do the customization of the apparel over the summer. Here's just a list of some of the bigger customers that we have for Lehigh. What we find is, we do very well when a larger employer with multiple locations who need that data provided to them to say, "Hey, is our facility in Columbus, Ohio, have they hit their quota for boots for the year?" It also actually enables the safety manager almost to become a little bit of a boot sales rep going around, making sure everybody has the right footwear. The customers really value all the data we can have. We can do billing by cost center. It's just a better way for the safety managers to manage the program. Touching on our distribution and manufacturing, Jason already called out the three manufacturing facilities that we have. This has been critically key and a big competitive advantage for us in the new tariff landscape, right? We have the ability to start production in one facility in Asia, finish that product in the Dominican Republic. We can kind of tariff engineer our production process to really be at a competitive advantage. A perfect example is the XTRATUF boot, the rubber boots out of China, even before any of the reciprocal tariffs, had a 45% duty on them. Rubber boots out of the Dominican, prior to all these reciprocal tariffs and 301 investigations and all that, had a 0% duty on them, right? Today, we're able to make part of that boot in our factory in China, ship that boot, or the material to Dominican Republic. Then we're able to finish that product in the Dominican Republic, and it only has a 10% duty. We effectively have boots today that cost less than they used to cost a couple of years ago. As much as this tariff has been a massive pain and challenge for us, it's kind of taught us new tricks. We distribute all of our product in the U.S. from two distribution centers. We do about 80% of the shipments in our facility in Logan, Ohio. Then 20% of our shipments out of Nevada. As we keep expanding our DTC business, as Jason was touching on earlier, it's becoming a competitive advantage to have inventory in both distribution centers because we can pick and choose where we're putting product and where we're shipping product from. As you're trying to ship more e-commerce, freight is obviously a big expense of that. We can be smarter about where we're shipping it from in the future. These are just some financial highlights. I'm not going to read the slide to you. You can see 2022, just to put things in perspective, right, was a massive banner year. We were coming out of the pandemic. We also had a couple of brands in the portfolio that we don't have today. You saw the big decline into 2023. Over the last couple of years, we've been able to grow sales. A lot of that's been driven by XTRATUF, Lehigh, and our DTC business. You can see the margin. We've been able to work margins up really consistently up until this year. We have the tariff hang-up that we're working through. We had about $7 million in Q1 and about $3 million here in Q2 that we've guided to of kind of incremental tariffs above and beyond the go-forward rate. We've been hyper-focused on getting inventory down. We were doing a spectacular job of that until the tariffs came along, that increased our cost. Pairs were actually flat from 2024-2025. With the incremental tariffs in there, the face of the balance sheet had higher inventory. We've also been meaningfully paying down debt over the last five years as well. Here's this in a bar chart form. You can see the sales going in the right direction. EPS is guided up, or has been going up, but guided down slightly because of tariffs for the rest of the year. You can see income from operations kind of steadily ticking up from 2023, or after 2023. For 2026, we've given an outlook to The Street. We've said net sales are going to increase 6%. This is a higher growth year for us. Part of that is being assisted the first half of the year by pricing that we took last year after the tariffs were announced. We took pricing in July of last year, we're going to anniversary that price increase at the beginning of Q3. We're continuing to see growth, particularly in XTRATUF, Lehigh, and online, as I noted earlier. Gross margin declined modestly. We will see how this plays out. If e-commerce, if the DTC business continues to be as strong, we'll probably see margin improvements later this year. We also have to work through all of the tariffs in the first half. We're anticipating leveraging operating expenses by about 80 basis points. This is being driven really by the sales increase, but also we are making incremental investments. We're investing a lot more digitally online to push our brands online. When we're selling online, we're seeing higher costs associated with fulfilling those orders, fuel surcharges given what's happened with the price of oil. Interest expense down year-over-year because of the decrease in debt, growing EPS in the mid-teen range. Just from an investment highlights perspective, we have a diversified brand. It insulates us if Western's in or out, we're diversified. We're also diversified in our distribution channel as well, having redundant distribution centers. We do use distributors for all of our international sales. We have distributors in Canada, U.K., Europe, Germany, we also have our own manufacturing facilities, which we've already touched on. Quarterly dividend increase announced last month, by the way, we're at 1.8% future dividend yield. We have a share repurchase program in place, we started in the 10-Q. If you read the 10-Q, we started actively participating in that. We bought about $800,000 or $900,000 worth of stock back in the first quarter. That's it. Any questions? You're unusual in that you own your own manufacturing. Dare I say you're unique in that. Just talk about that strategically going forward. Yeah. Jason, you can fill in since I'm on the mic. It is a big competitive advantage to have your own manufacturing. It does create a lot of headaches. Our ability to react to things is much quicker than a lot of our peers have when they rely on partners to source all their product. A couple examples of this. We've seen this with the pandemic when everybody got stimulus money, everybody was chasing inventory. We got inventory to customers faster because of that. It's also allowed us to play this tariff game significantly differently. We've been doing that, we've been in, well, 40 years down in Puerto Rico and Dominican Republic, and it's a great advantage to have. Partially the military business, we have to make those in Puerto Rico as well. We make those in Puerto Rico made in the USA for all the requirements for the U.S. government. I think we've always been in manufacturing. Since the company started, it was a manufacturing company, and having those facilities in the Dominican and Puerto Rico really produced, only produced leather goods. In the acquisition in 2021, the factory in China, that's mainly, it's really all rubber product. The education we're learning on that manufacturing to help us now, we are actually moving some of that production to the Dominican. We'll see what happens with China. That factory's amazing. They do such a great job. I think just to reiterate what Tom said, too, having the control, because if we need something tomorrow, our other sourcing partners aren't going to stop what they're doing to help us. I can stop that factory and say, "No, make this." It really is beneficial, especially when Tractor Supply calls and says, "I need an extra 50,000 pair." I'm like, "Okay, we'll get on it. The capital commitment, employee commitment, and all that excuse me, justifies your owning it yourself? Yes. Yeah, no. I'm sure- That's a loaded question. Right. It's a lot. 1,000 employees. 1,000 employees. I mean, our employees, but 1,000 employees there. Puerto Rico's probably got 400. 400. China's probably got 400. 400 or 500. You're right, it is significant. We're able to build those products there and get those at a cheaper price than when we source it from someone else. It also allows us to source product better. Yeah. We know what to look for. We know when we get a bill of materials, or we go to another factory to source a product, we know what the labor cost is in Asia to make that product. We know exactly what the raw materials cost. I think it gives us a better education as well. The capital expense, in footwear, there are certainly capital expenses with it, but it's not as meaningful as you think because the equipment lasts so long. We've got DESMAs. There's a DESMA in the Dominican Republic that was moved from Ohio over 30 years ago. It's not as capital intensive. If you look back at our CapEx, we're running less than 2% of sales for CapEx. If you wanted to open a factory, you had. Yeah. To buy all that equipment, yes, it's very capital. Every year we add new machines, we add new sewing machines, we add new whatever. Yeah. It's a great question. Yeah. It's real, for sure. Any other questions? Bill. The XTRATUF direct to consumer. Yep. What's that rate of growth relative to the rate of growth of wholesale at XTRATUF? XTRATUF in the fourth quarter of last year grew online 100%. It's growing faster than- First quarter was in the 70%, 60, 70%. The wholesale? Wholesale around high teens. Both periods? Yeah. Great, thanks. We've applied for our refund, we didn't talk about that, for the tariff refund. That's about $20.5 million we're working to get back. We're starting to get a couple pieces and bits of it, but they're making it very difficult. The system works really well. Anything else? Awesome. All right, well, thanks, everybody. Thank you, guys so much.

Speaker 2: Okay, we're going to get started now. Okay, we're going to get started now. okay we're going to get started now Good afternoon. I'm John McNamara with Three Part Advisors. Our next presentation is Rocky Brands. Rocky Brands designs, manufactures, and markets premium work, outdoor, and Western footwear and apparel through a portfolio of heritage brands. The stock trades on the Nasdaq under the symbol RCKY. With us from management are Jason Brooks, President and Chief Executive Officer, and Tom Robertson, Chief Operating and Chief Financial Officer. Who's going to take over? Tom? Good afternoon. good afternoon I'm John McNamara with Three Part Advisors. i'm john mcnamara with three part advisors Our next presentation is Rocky Brands. our next presentation is rocky brands Rocky Brands designs, manufactures, and markets premium work, outdoor, and Western footwear and apparel through a portfolio of heritage brands. rocky brands designs manufactures and markets premium work outdoor and western footwear and apparel through a portfolio of heritage brands The stock trades on the Nasdaq under the symbol RCKY. the stock trades on the nasdaq under the symbol rcky With us from management are Jason Brooks, President and Chief Executive Officer, and Tom Robertson, Chief Operating and Chief Financial Officer. with us from management are jason brooks president and chief executive officer and tom robertson chief operating and chief financial officer Who's going to take over? who's going to take over Tom? tom

Speaker 1: I'm going to take over, yeah. I'm going to take over, yeah. i'm going to take over yeah

Speaker 2: It's all yours. It's all yours. it's all yours

Speaker 1: Thank you, John. Appreciate it. Thank you all for being here. Appreciate that. Thank you, John. thank you john Appreciate it. appreciate it Thank you all for being here. thank you all for being here Appreciate that. appreciate that

Speaker 2: Speak to the- Speak to the- speak to the-

Speaker 1: You want me up there? You want me up there? you want me up there

Speaker 2: the internet audience. the internet audience. the internet audience

Speaker 1: I got to go up here. Wow. Not used to having a mic in front of me. Again, thank you for being here. We'll go over some slides and then, I guess, John, if it's okay, do questions at the end? I got to go up here. i got to go up here Wow. wow Not used to having a mic in front of me. not used to having a mic in front of me Again, thank you for being here. again thank you for being here We'll go over some slides and then, I guess, John, if it's okay, do questions at the end? we'll go over some slides and then i guess john if it's okay do questions at the end Awesome. Thank you very much. Awesome. awesome Thank you very much. thank you very much I've done. Get out. Safe harbor statement, I'm sure everybody here knows what this is. We'll jump in, talk a little bit about the history of the company, the portfolio brands, 25 sales mix, brand overviews, distribution, and manufacturing, a little bit on the financial highlights, investment, and contact information as well. Rocky Brands started back in 1932. I promise I won't go through every year, but 1932 is when the company started in Nelsonville, Ohio. In the 1980s, we built our own factories in the Dominican Republic and also in Puerto Rico. We still have those factories today, and they still produce product for us. We did go public in 1993, and in 2005, we did an acquisition of EJ Footwear or Endicott Johnson Footwear, which was the Durango, the Georgia Boot brand, and the Lehigh business, which we'll talk a little bit about later. I've done. i've done Get out. get out Safe harbor statement, I'm sure everybody here knows what this is. safe harbor statement i'm sure everybody here knows what this is We'll jump in, talk a little bit about the history of the company, the portfolio brands, 25 sales mix, brand overviews, distribution, and manufacturing, a little bit on the financial highlights, investment, and contact information as well. we'll jump in talk a little bit about the history of the company the portfolio brands 25 sales mix brand overviews distribution and manufacturing a little bit on the financial highlights investment and contact information as well Rocky Brands started back in 1932. rocky brands started back in 1932 I promise I won't go through every year, but 1932 is when the company started in Nelsonville, Ohio. i promise i won't go through every year but 1932 is when the company started in nelsonville ohio In the 1980s, we built our own factories in the Dominican Republic and also in Puerto Rico. in the 1980s we built our own factories in the dominican republic and also in puerto rico We still have those factories today, and they still produce product for us. we still have those factories today and they still produce product for us We did go public in 1993, and in 2005, we did an acquisition of EJ Footwear or Endicott Johnson Footwear, which was the Durango, the Georgia Boot brand, and the Lehigh business, which we'll talk a little bit about later. we did go public in 1993 and in 2005 we did an acquisition of ej footwear or endicott johnson footwear which was the durango the georgia boot brand and the lehigh business which we'll talk a little bit about later In 2017, we had a leadership change, and that was when I was fortunate enough to move into the CEO role, this is going on my 10th year, which is kind of crazy to think about. In 2021, we did another acquisition of the Muck brand, XTRATUF, NEOS, Servus, and Ranger. We have since sold off the NEOS and the Servus brand in 2023. We break out the segments in wholesale, retail, and contract manufacturing, and as I mentioned, we own manufacturing in the U.S., we have the Dominican, and with the acquisition in 2021 came a factory in mainland China as well. Again, these are the strong brands that we have. We've talked a little bit about them already. This slide gives you a little bit of information about the company. Wholesale is 66%. In 2017, we had a leadership change, and that was when I was fortunate enough to move into the CEO role, this is going on my 10th year, which is kind of crazy to think about. in 2017 we had a leadership change and that was when i was fortunate enough to move into the ceo role this is going on my 10th year which is kind of crazy to think about In 2021, we did another acquisition of the Muck brand, XTRATUF, NEOS, Servus, and Ranger. in 2021 we did another acquisition of the muck brand xtratuf neos servus and ranger We have since sold off the NEOS and the Servus brand in 2023. we have since sold off the neos and the servus brand in 2023 We break out the segments in wholesale, retail, and contract manufacturing, and as I mentioned, we own manufacturing in the U.S., we have the Dominican, and with the acquisition in 2021 came a factory in mainland China as well. we break out the segments in wholesale retail and contract manufacturing and as i mentioned we own manufacturing in the u.s we have the dominican and with the acquisition in 2021 came a factory in mainland china as well Again, these are the strong brands that we have. again these are the strong brands that we have We've talked a little bit about them already. we've talked a little bit about them already This slide gives you a little bit of information about the company. this slide gives you a little bit of information about the company Wholesale is 66%. wholesale is 66% Retail, that would include our DTC business, our own websites, but the retail also would encompass our Lehigh business, which we'll talk a little more about why we call that retail. The contract manufacturing today is 2% of the business, and that fluctuates with the U.S. government, needing military boots or not needing. This will give you a little breakdown on the brands. Work is our biggest category, and pretty much every brand falls in the work category. Outdoor, I want to clarify for us, outdoor is more the fishing, hunting outdoor segment, not as much around the hiking section. We specify that very differently. Western boots, Durango's the largest Western category that we have, and Rocky also makes up a little bit of that. Service is going to be your police, fire departments. We do footwear for all those areas. Retail, that would include our DTC business, our own websites, but the retail also would encompass our Lehigh business, which we'll talk a little more about why we call that retail. retail that would include our dtc business our own websites but the retail also would encompass our lehigh business which we'll talk a little more about why we call that retail The contract manufacturing today is 2% of the business, and that fluctuates with the U.S. government, needing military boots or not needing. the contract manufacturing today is 2% of the business and that fluctuates with the u.s government needing military boots or not needing This will give you a little breakdown on the brands. this will give you a little breakdown on the brands Work is our biggest category, and pretty much every brand falls in the work category. work is our biggest category and pretty much every brand falls in the work category Outdoor, I want to clarify for us, outdoor is more the fishing, hunting outdoor segment, not as much around the hiking section. outdoor i want to clarify for us outdoor is more the fishing hunting outdoor segment not as much around the hiking section We specify that very differently. we specify that very differently Western boots, Durango's the largest Western category that we have, and Rocky also makes up a little bit of that. western boots durango's the largest western category that we have and rocky also makes up a little bit of that Service is going to be your police, fire departments. service is going to be your police fire departments We do footwear for all those areas. we do footwear for all those areas Apparel, we have a little bit of apparel, like I said, it's 2% of the business. Definitely somewhere we could focus on and grow on, and we'll continue to do that. A little bit about Muck. The imagery will just give you a little bit about the target audience that we're going after here, and think about farm and ranch, think about people who have big farms but have their own backyard farm. These boots will really accommodate in all those sections. These are just some of the three examples of our top sellers, and there to the right, you'll see some of the key customers like Tractor Supply, Bass Pro, depending on if it's more of the work category or if it's more of that hunting category. Muck sales from a wholesale standpoint is about 75% of our business. Apparel, we have a little bit of apparel, like I said, it's 2% of the business. apparel we have a little bit of apparel like i said it's 2% of the business Definitely somewhere we could focus on and grow on, and we'll continue to do that. definitely somewhere we could focus on and grow on and we'll continue to do that A little bit about Muck. a little bit about muck The imagery will just give you a little bit about the target audience that we're going after here, and think about farm and ranch, think about people who have big farms but have their own backyard farm. the imagery will just give you a little bit about the target audience that we're going after here and think about farm and ranch think about people who have big farms but have their own backyard farm These boots will really accommodate in all those sections. these boots will really accommodate in all those sections These are just some of the three examples of our top sellers, and there to the right, you'll see some of the key customers like Tractor Supply, Bass Pro, depending on if it's more of the work category or if it's more of that hunting category. these are just some of the three examples of our top sellers and there to the right you'll see some of the key customers like tractor supply bass pro depending on if it's more of the work category or if it's more of that hunting category Muck sales from a wholesale standpoint is about 75% of our business. muck sales from a wholesale standpoint is about 75% of our business Again, back to those customers, the Tractors of the world, the Bass Pros of the world, but we do do about 25% of our business DTC there on our own website, muckboots.com. Jumping into Rocky, as I mentioned, we do kind of all categories here. The upper left-hand corner is going to be what we call is commercial military. I talked a little bit about our U.S. government contracts. This is going to fall under just wholesale. What we do here is design, develop better boots than what the government is giving to our military, and we sell these in retail stores like AAFES is one of the largest retailers around the world there on U.S. bases, right? They sell everything to the people that are on the bases. They would go in there and purchase those boots directly for themselves. Again, back to those customers, the Tractors of the world, the Bass Pros of the world, but we do do about 25% of our business DTC there on our own website, muckboots.com. again back to those customers the tractors of the world the bass pros of the world but we do do about 25% of our business dtc there on our own website muckboots.com Jumping into Rocky, as I mentioned, we do kind of all categories here. jumping into rocky as i mentioned we do kind of all categories here The upper left-hand corner is going to be what we call is commercial military. the upper left-hand corner is going to be what we call is commercial military I talked a little bit about our U.S. government contracts. i talked a little bit about our u.s government contracts This is going to fall under just wholesale. this is going to fall under just wholesale What we do here is design, develop better boots than what the government is giving to our military, and we sell these in retail stores like AAFES is one of the largest retailers around the world there on U.S. bases, right? what we do here is design develop better boots than what the government is giving to our military and we sell these in retail stores like aafes is one of the largest retailers around the world there on u.s bases right They sell everything to the people that are on the bases. they sell everything to the people that are on the bases They would go in there and purchase those boots directly for themselves. they would go in there and purchase those boots directly for themselves The police boots, you can see there, the black, a little hunting boot, just a brown Gore-Tex casual kind of work shoe. About 80% of our business is done through wholesale on Rocky and about 20% direct on the rockyboots.com website. Georgia, I like to talk about, this is our blue-collar working guy, around more rural than in the cities. Kind of an opportunity for us if we can get a little more penetration in places like New York City. This is the top three kind of styles that we have here. Our wedges are a really popular product line for us. The shoe all the way to the right is called the Romeo, and that is very big out in the Northwest. That shoe's been in the line about 25 years, hasn't changed a bit. The police boots, you can see there, the black, a little hunting boot, just a brown Gore-Tex casual kind of work shoe. the police boots you can see there the black a little hunting boot just a brown gore-tex casual kind of work shoe About 80% of our business is done through wholesale on Rocky and about 20% direct on the rockyboots.com website. about 80% of our business is done through wholesale on rocky and about 20% direct on the rockyboots.com website Georgia, I like to talk about, this is our blue-collar working guy, around more rural than in the cities. georgia i like to talk about this is our blue-collar working guy around more rural than in the cities Kind of an opportunity for us if we can get a little more penetration in places like New York City. kind of an opportunity for us if we can get a little more penetration in places like new york city This is the top three kind of styles that we have here. this is the top three kind of styles that we have here Our wedges are a really popular product line for us. our wedges are a really popular product line for us The shoe all the way to the right is called the Romeo, and that is very big out in the Northwest. the shoe all the way to the right is called the romeo and that is very big out in the northwest That shoe's been in the line about 25 years, hasn't changed a bit. that shoe's been in the line about 25 years hasn't changed a bit Same leather, same outsole, everything, which I personally really like, just that kind of everyday thing. Boot Barn's a big customer. Tractor Supply as well is a big customer. Out in the West Coast, Coastal is a big farm and ranch retailer out there. Georgia Boot is about 86% wholesale, 14% online. One of the things that we think here is if you think about that customer base I just talked about, like that blue-collar guy, he's definitely coming and doing more shopping online, he's the kind of guy, he got done working that day, his boot's leaking, he needs to go to the store and get a new pair of boots for work tomorrow. A little bit less there, but we are target marketing them and trying to increase our DTC business. Durango is our Western-influenced product. Same leather, same outsole, everything, which I personally really like, just that kind of everyday thing. same leather same outsole everything which i personally really like just that kind of everyday thing Boot Barn's a big customer. boot barn's a big customer Tractor Supply as well is a big customer. tractor supply as well is a big customer Out in the West Coast, Coastal is a big farm and ranch retailer out there. out in the west coast coastal is a big farm and ranch retailer out there Georgia Boot is about 86% wholesale, 14% online. georgia boot is about 86% wholesale 14% online One of the things that we think here is if you think about that customer base I just talked about, like that blue-collar guy, he's definitely coming and doing more shopping online, he's the kind of guy, he got done working that day, his boot's leaking, he needs to go to the store and get a new pair of boots for work tomorrow. one of the things that we think here is if you think about that customer base i just talked about like that blue-collar guy he's definitely coming and doing more shopping online he's the kind of guy he got done working that day his boot's leaking he needs to go to the store and get a new pair of boots for work tomorrow A little bit less there, but we are target marketing them and trying to increase our DTC business. a little bit less there but we are target marketing them and trying to increase our dtc business Durango is our Western-influenced product. durango is our western-influenced product The flag boot there in the middle has been one of our best-selling boots for probably 15 years. The flag boot there in the middle has been one of our best-selling boots for probably 15 years. the flag boot there in the middle has been one of our best-selling boots for probably 15 years

Speaker 3: Yeah, close. Yeah, close. yeah close

Speaker 1: Yeah. Cavender's, a big Western retailer down in Texas. Boot Barn does really well with the Durango brand also. Durango, again, about 89% wholesale, 11% DTC. Again, if you think about the guy wearing that, they're probably going to be needing those boots a little bit quicker than waiting two days to get them delivered. Trying to push more business to our own websites, and we'll continue to do that. XTRATUF is our Alaska-built fishing boot, and this is actually our fastest-growing brand right now and has been for probably the last four or five years. The boot all the way to the left is the Legacy boot. That's where the brand really started in Alaska. If you've ever seen the TV show "Deadliest Catch," all of the fishermen are wearing that boot on that show. They just buy it. Yeah. yeah Cavender's, a big Western retailer down in Texas. cavender's a big western retailer down in texas Boot Barn does really well with the Durango brand also. boot barn does really well with the durango brand also Durango, again, about 89% wholesale, 11% DTC. durango again about 89% wholesale 11% dtc Again, if you think about the guy wearing that, they're probably going to be needing those boots a little bit quicker than waiting two days to get them delivered. again if you think about the guy wearing that they're probably going to be needing those boots a little bit quicker than waiting two days to get them delivered Trying to push more business to our own websites, and we'll continue to do that. trying to push more business to our own websites and we'll continue to do that XTRATUF is our Alaska-built fishing boot, and this is actually our fastest-growing brand right now and has been for probably the last four or five years. xtratuf is our alaska-built fishing boot and this is actually our fastest-growing brand right now and has been for probably the last four or five years The boot all the way to the left is the Legacy boot. the boot all the way to the left is the legacy boot That's where the brand really started in Alaska. that's where the brand really started in alaska If you've ever seen the TV show "Deadliest Catch," all of the fishermen are wearing that boot on that show. if you've ever seen the tv show "deadliest catch," all of the fishermen are wearing that boot on that show They just buy it. they just buy it We don't sponsor it. We don't do anything to get it. What they would do normally after the fishing season in Alaska, they would come maybe to Florida, and they would bring this boot, but they would cut it down. Just to the right of it, the brown one, that's where the ADV kind of came from. Very functional, good use for boating and fishing, but now we're seeing it expand into different areas. Moms and kids are buying into it. College students are buying into it. The great thing about XTRATUF is it's really a coastal brand right now, but we're starting to see it come inwards quite a bit. One of the areas we saw last year was in the ski areas, fleece-lined ADVs have become very popular. We don't sponsor it. we don't sponsor it We don't do anything to get it. we don't do anything to get it What they would do normally after the fishing season in Alaska, they would come maybe to Florida, and they would bring this boot, but they would cut it down. what they would do normally after the fishing season in alaska they would come maybe to florida and they would bring this boot but they would cut it down Just to the right of it, the brown one, that's where the ADV kind of came from. just to the right of it the brown one that's where the adv kind of came from Very functional, good use for boating and fishing, but now we're seeing it expand into different areas. very functional good use for boating and fishing but now we're seeing it expand into different areas Moms and kids are buying into it. moms and kids are buying into it College students are buying into it. college students are buying into it The great thing about XTRATUF is it's really a coastal brand right now, but we're starting to see it come inwards quite a bit. the great thing about xtratuf is it's really a coastal brand right now but we're starting to see it come inwards quite a bit One of the areas we saw last year was in the ski areas, fleece-lined ADVs have become very popular. one of the areas we saw last year was in the ski areas fleece-lined advs have become very popular You take your ski boots off, you slip your ADVs on, you're in a good place. 73% wholesale, about 27% DTC. Again, if you think about the brand and what it offers, there's more women buying this brand as well. Online is working better in that area. The need's not quite as urgent to have that boot today. I'm going to have Tom come up and do this. He loves Lehigh. You take your ski boots off, you slip your ADVs on, you're in a good place. 73% wholesale, about 27% DTC. you take your ski boots off you slip your advs on you're in a good place 73% wholesale about 27% dtc Again, if you think about the brand and what it offers, there's more women buying this brand as well. again if you think about the brand and what it offers there's more women buying this brand as well Online is working better in that area. online is working better in that area The need's not quite as urgent to have that boot today. the need's not quite as urgent to have that boot today I'm going to have Tom come up and do this. i'm going to have tom come up and do this He loves Lehigh. he loves lehigh

Speaker 3: Yeah. Lehigh CustomFit, for those of you who don't know, it's a really unique business. What we do is we enter into relationships with employers that have some type of safety footwear requirement. In those situations, a lot of times, those employers are actually providing a subsidy or voucher for the footwear for their employees. The thing I love most about this business is that it's like an annuity in footwear, every year, we have these employers, they give the subsidy, and the employees almost always spend their subsidy. The unique thing about us, this business has evolved over the years. It started selling trucks, pulling up to manufacturing facilities, selling the inventory to the employees. We used to have 120 trucks on the road 15 years ago. The evolution is we took it all digitally, right? Yeah. yeah Lehigh CustomFit, for those of you who don't know, it's a really unique business. lehigh customfit for those of you who don't know it's a really unique business What we do is we enter into relationships with employers that have some type of safety footwear requirement. what we do is we enter into relationships with employers that have some type of safety footwear requirement In those situations, a lot of times, those employers are actually providing a subsidy or voucher for the footwear for their employees. in those situations a lot of times those employers are actually providing a subsidy or voucher for the footwear for their employees The thing I love most about this business is that it's like an annuity in footwear, every year, we have these employers, they give the subsidy, and the employees almost always spend their subsidy. the thing i love most about this business is that it's like an annuity in footwear every year we have these employers they give the subsidy and the employees almost always spend their subsidy The unique thing about us, this business has evolved over the years. the unique thing about us this business has evolved over the years It started selling trucks, pulling up to manufacturing facilities, selling the inventory to the employees. it started selling trucks pulling up to manufacturing facilities selling the inventory to the employees We used to have 120 trucks on the road 15 years ago. we used to have 120 trucks on the road 15 years ago The evolution is we took it all digitally, right? the evolution is we took it all digitally right Selling product through trucks is a really bad way of selling boots, right? The inventory is limited to what's on the truck. Having the trucks just drive around, the cost associated with that, the collection of cash, returns were a nightmare. This industry is built for selling shoes or selling online, the beauty of it is we sell our brands, but we also sell third-party brands. We sell Timberland, Ariat, Justin, over 65 different brands. One of the great things about this business is it's very capital light, right? About 50% of this product that we sell, we never actually physically touch. We just act as the conduit or the marketplace for those employees to buy the product. One of the things we've been experimenting with, last year, we introduced prescription eyeglasses to the program. Selling product through trucks is a really bad way of selling boots, right? selling product through trucks is a really bad way of selling boots right The inventory is limited to what's on the truck. the inventory is limited to what's on the truck Having the trucks just drive around, the cost associated with that, the collection of cash, returns were a nightmare. having the trucks just drive around the cost associated with that the collection of cash returns were a nightmare This industry is built for selling shoes or selling online, the beauty of it is we sell our brands, but we also sell third-party brands. this industry is built for selling shoes or selling online the beauty of it is we sell our brands but we also sell third-party brands We sell Timberland, Ariat, Justin, over 65 different brands. we sell timberland ariat justin over 65 different brands One of the great things about this business is it's very capital light, right? one of the great things about this business is it's very capital light right About 50% of this product that we sell, we never actually physically touch. about 50% of this product that we sell we never actually physically touch We just act as the conduit or the marketplace for those employees to buy the product. we just act as the conduit or the marketplace for those employees to buy the product One of the things we've been experimenting with, last year, we introduced prescription eyeglasses to the program. one of the things we've been experimenting with last year we introduced prescription eyeglasses to the program It bolts right onto the proprietary platform that we built for this. Again, that's a contactless sale for us, right? They upload their prescriptions, the eyeglass manufacturer, Bollé, sends the prescription directly to the customer, we make a good margin on it. The exciting part about this is that we're going to be moving into apparel here in the fall. The idea around that, we have customers already asking for it, right? The apparel subsidy program is much larger than the footwear. It's somewhere between eight and 10 times the footwear voucher, we think this could be a good growth area for us. A lot of our customers already for Lehigh, the employees are already wearing a shirt with the company logo on it, fire-resistant clothing, things such as that. We think this will be an easy bolt-on. It bolts right onto the proprietary platform that we built for this. it bolts right onto the proprietary platform that we built for this Again, that's a contactless sale for us, right? again that's a contactless sale for us right They upload their prescriptions, the eyeglass manufacturer, Bollé, sends the prescription directly to the customer, we make a good margin on it. they upload their prescriptions the eyeglass manufacturer bollé sends the prescription directly to the customer we make a good margin on it The exciting part about this is that we're going to be moving into apparel here in the fall. the exciting part about this is that we're going to be moving into apparel here in the fall The idea around that, we have customers already asking for it, right? the idea around that we have customers already asking for it right The apparel subsidy program is much larger than the footwear. the apparel subsidy program is much larger than the footwear It's somewhere between eight and 10 times the footwear voucher, we think this could be a good growth area for us. it's somewhere between eight and 10 times the footwear voucher we think this could be a good growth area for us A lot of our customers already for Lehigh, the employees are already wearing a shirt with the company logo on it, fire-resistant clothing, things such as that. a lot of our customers already for lehigh the employees are already wearing a shirt with the company logo on it fire-resistant clothing things such as that We think this will be an easy bolt-on. we think this will be an easy bolt-on We've done the work on the technology side to get this in place. Now we're going to be implementing getting the equipment to do the customization of the apparel over the summer. Here's just a list of some of the bigger customers that we have for Lehigh. What we find is, we do very well when a larger employer with multiple locations who need that data provided to them to say, "Hey, is our facility in Columbus, Ohio, have they hit their quota for boots for the year?" It also actually enables the safety manager almost to become a little bit of a boot sales rep going around, making sure everybody has the right footwear. The customers really value all the data we can have. We've done the work on the technology side to get this in place. we've done the work on the technology side to get this in place Now we're going to be implementing getting the equipment to do the customization of the apparel over the summer. now we're going to be implementing getting the equipment to do the customization of the apparel over the summer Here's just a list of some of the bigger customers that we have for Lehigh. here's just a list of some of the bigger customers that we have for lehigh What we find is, we do very well when a larger employer with multiple locations who need that data provided to them to say, "Hey, is our facility in Columbus, Ohio, have they hit their quota for boots for the year?" It also actually enables the safety manager almost to become a little bit of a boot sales rep going around, making sure everybody has the right footwear. what we find is we do very well when a larger employer with multiple locations who need that data provided to them to say "hey is our facility in columbus ohio have they hit their quota for boots for the year?" it also actually enables the safety manager almost to become a little bit of a boot sales rep going around making sure everybody has the right footwear The customers really value all the data we can have. the customers really value all the data we can have We can do billing by cost center. It's just a better way for the safety managers to manage the program. Touching on our distribution and manufacturing, Jason already called out the three manufacturing facilities that we have. This has been critically key and a big competitive advantage for us in the new tariff landscape, right? We have the ability to start production in one facility in Asia, finish that product in the Dominican Republic. We can kind of tariff engineer our production process to really be at a competitive advantage. A perfect example is the XTRATUF boot, the rubber boots out of China, even before any of the reciprocal tariffs, had a 45% duty on them. Rubber boots out of the Dominican, prior to all these reciprocal tariffs and 301 investigations and all that, had a 0% duty on them, right? We can do billing by cost center. we can do billing by cost center It's just a better way for the safety managers to manage the program. it's just a better way for the safety managers to manage the program Touching on our distribution and manufacturing, Jason already called out the three manufacturing facilities that we have. touching on our distribution and manufacturing jason already called out the three manufacturing facilities that we have This has been critically key and a big competitive advantage for us in the new tariff landscape, right? this has been critically key and a big competitive advantage for us in the new tariff landscape right We have the ability to start production in one facility in Asia, finish that product in the Dominican Republic. we have the ability to start production in one facility in asia finish that product in the dominican republic We can kind of tariff engineer our production process to really be at a competitive advantage. we can kind of tariff engineer our production process to really be at a competitive advantage A perfect example is the XTRATUF boot, the rubber boots out of China, even before any of the reciprocal tariffs, had a 45% duty on them. a perfect example is the xtratuf boot the rubber boots out of china even before any of the reciprocal tariffs had a 45% duty on them Rubber boots out of the Dominican, prior to all these reciprocal tariffs and 301 investigations and all that, had a 0% duty on them, right? rubber boots out of the dominican prior to all these reciprocal tariffs and 301 investigations and all that had a 0% duty on them right Today, we're able to make part of that boot in our factory in China, ship that boot, or the material to Dominican Republic. Then we're able to finish that product in the Dominican Republic, and it only has a 10% duty. We effectively have boots today that cost less than they used to cost a couple of years ago. As much as this tariff has been a massive pain and challenge for us, it's kind of taught us new tricks. We distribute all of our product in the U.S. from two distribution centers. We do about 80% of the shipments in our facility in Logan, Ohio. Then 20% of our shipments out of Nevada. Today, we're able to make part of that boot in our factory in China, ship that boot, or the material to Dominican Republic. today we're able to make part of that boot in our factory in china ship that boot or the material to dominican republic Then we're able to finish that product in the Dominican Republic, and it only has a 10% duty. then we're able to finish that product in the dominican republic and it only has a 10% duty We effectively have boots today that cost less than they used to cost a couple of years ago. we effectively have boots today that cost less than they used to cost a couple of years ago As much as this tariff has been a massive pain and challenge for us, it's kind of taught us new tricks. as much as this tariff has been a massive pain and challenge for us it's kind of taught us new tricks We distribute all of our product in the U.S. from two distribution centers. we distribute all of our product in the u.s from two distribution centers We do about 80% of the shipments in our facility in Logan, Ohio. we do about 80% of the shipments in our facility in logan ohio Then 20% of our shipments out of Nevada. then 20% of our shipments out of nevada As we keep expanding our DTC business, as Jason was touching on earlier, it's becoming a competitive advantage to have inventory in both distribution centers because we can pick and choose where we're putting product and where we're shipping product from. As you're trying to ship more e-commerce, freight is obviously a big expense of that. We can be smarter about where we're shipping it from in the future. These are just some financial highlights. I'm not going to read the slide to you. You can see 2022, just to put things in perspective, right, was a massive banner year. We were coming out of the pandemic. We also had a couple of brands in the portfolio that we don't have today. You saw the big decline into 2023. Over the last couple of years, we've been able to grow sales. As we keep expanding our DTC business, as Jason was touching on earlier, it's becoming a competitive advantage to have inventory in both distribution centers because we can pick and choose where we're putting product and where we're shipping product from. as we keep expanding our dtc business as jason was touching on earlier it's becoming a competitive advantage to have inventory in both distribution centers because we can pick and choose where we're putting product and where we're shipping product from As you're trying to ship more e-commerce, freight is obviously a big expense of that. as you're trying to ship more e-commerce freight is obviously a big expense of that We can be smarter about where we're shipping it from in the future. we can be smarter about where we're shipping it from in the future These are just some financial highlights. these are just some financial highlights I'm not going to read the slide to you. i'm not going to read the slide to you You can see 2022, just to put things in perspective, right, was a massive banner year. you can see 2022 just to put things in perspective right was a massive banner year We were coming out of the pandemic. we were coming out of the pandemic We also had a couple of brands in the portfolio that we don't have today. we also had a couple of brands in the portfolio that we don't have today You saw the big decline into 2023. you saw the big decline into 2023 Over the last couple of years, we've been able to grow sales. over the last couple of years we've been able to grow sales A lot of that's been driven by XTRATUF, Lehigh, and our DTC business. You can see the margin. We've been able to work margins up really consistently up until this year. We have the tariff hang-up that we're working through. We had about $7 million in Q1 and about $3 million here in Q2 that we've guided to of kind of incremental tariffs above and beyond the go-forward rate. We've been hyper-focused on getting inventory down. We were doing a spectacular job of that until the tariffs came along, that increased our cost. Pairs were actually flat from 2024-2025. With the incremental tariffs in there, the face of the balance sheet had higher inventory. We've also been meaningfully paying down debt over the last five years as well. Here's this in a bar chart form. A lot of that's been driven by XTRATUF, Lehigh, and our DTC business. a lot of that's been driven by xtratuf lehigh and our dtc business You can see the margin. you can see the margin We've been able to work margins up really consistently up until this year. we've been able to work margins up really consistently up until this year We have the tariff hang-up that we're working through. we have the tariff hang-up that we're working through We had about $7 million in Q1 and about $3 million here in Q2 that we've guided to of kind of incremental tariffs above and beyond the go-forward rate. we had about $7 million in q1 and about $3 million here in q2 that we've guided to of kind of incremental tariffs above and beyond the go-forward rate We've been hyper-focused on getting inventory down. we've been hyper-focused on getting inventory down We were doing a spectacular job of that until the tariffs came along, that increased our cost. we were doing a spectacular job of that until the tariffs came along that increased our cost Pairs were actually flat from 2024- 2025. pairs were actually flat from 2024- 2025 With the incremental tariffs in there, the face of the balance sheet had higher inventory. with the incremental tariffs in there the face of the balance sheet had higher inventory We've also been meaningfully paying down debt over the last five years as well. we've also been meaningfully paying down debt over the last five years as well Here's this in a bar chart form. here's this in a bar chart form You can see the sales going in the right direction. EPS is guided up, or has been going up, but guided down slightly because of tariffs for the rest of the year. You can see income from operations kind of steadily ticking up from 2023, or after 2023. For 2026, we've given an outlook to The Street. We've said net sales are going to increase 6%. This is a higher growth year for us. Part of that is being assisted the first half of the year by pricing that we took last year after the tariffs were announced. We took pricing in July of last year, we're going to anniversary that price increase at the beginning of Q3. We're continuing to see growth, particularly in XTRATUF, Lehigh, and online, as I noted earlier. Gross margin declined modestly. We will see how this plays out. You can see the sales going in the right direction. you can see the sales going in the right direction EPS is guided up, or has been going up, but guided down slightly because of tariffs for the rest of the year. eps is guided up or has been going up but guided down slightly because of tariffs for the rest of the year You can see income from operations kind of steadily ticking up from 2023, or after 2023. you can see income from operations kind of steadily ticking up from 2023 or after 2023 For 2026, we've given an outlook to The Street. for 2026 we've given an outlook to the street We've said net sales are going to increase 6%. we've said net sales are going to increase 6% This is a higher growth year for us. this is a higher growth year for us Part of that is being assisted the first half of the year by pricing that we took last year after the tariffs were announced. part of that is being assisted the first half of the year by pricing that we took last year after the tariffs were announced We took pricing in July of last year, we're going to anniversary that price increase at the beginning of Q3. we took pricing in july of last year we're going to anniversary that price increase at the beginning of q3 We're continuing to see growth, particularly in XTRATUF, Lehigh, and online, as I noted earlier. we're continuing to see growth particularly in xtratuf lehigh and online as i noted earlier Gross margin declined modestly. gross margin declined modestly We will see how this plays out. we will see how this plays out If e-commerce, if the DTC business continues to be as strong, we'll probably see margin improvements later this year. We also have to work through all of the tariffs in the first half. We're anticipating leveraging operating expenses by about 80 basis points. This is being driven really by the sales increase, but also we are making incremental investments. We're investing a lot more digitally online to push our brands online. When we're selling online, we're seeing higher costs associated with fulfilling those orders, fuel surcharges given what's happened with the price of oil. Interest expense down year-over-year because of the decrease in debt, growing EPS in the mid-teen range. Just from an investment highlights perspective, we have a diversified brand. It insulates us if Western's in or out, we're diversified. If e-commerce, if the DTC business continues to be as strong, we'll probably see margin improvements later this year. if e-commerce if the dtc business continues to be as strong we'll probably see margin improvements later this year We also have to work through all of the tariffs in the first half. we also have to work through all of the tariffs in the first half We're anticipating leveraging operating expenses by about 80 basis points. we're anticipating leveraging operating expenses by about 80 basis points This is being driven really by the sales increase, but also we are making incremental investments. this is being driven really by the sales increase but also we are making incremental investments We're investing a lot more digitally online to push our brands online. we're investing a lot more digitally online to push our brands online When we're selling online, we're seeing higher costs associated with fulfilling those orders, fuel surcharges given what's happened with the price of oil. when we're selling online we're seeing higher costs associated with fulfilling those orders fuel surcharges given what's happened with the price of oil Interest expense down year-over-year because of the decrease in debt, growing EPS in the mid-teen range. interest expense down year-over-year because of the decrease in debt growing eps in the mid-teen range Just from an investment highlights perspective, we have a diversified brand. just from an investment highlights perspective we have a diversified brand It insulates us if Western's in or out, we're diversified. it insulates us if western's in or out we're diversified We're also diversified in our distribution channel as well, having redundant distribution centers. We do use distributors for all of our international sales. We have distributors in Canada, U.K., Europe, Germany, we also have our own manufacturing facilities, which we've already touched on. Quarterly dividend increase announced last month, by the way, we're at 1.8% future dividend yield. We have a share repurchase program in place, we started in the 10-Q. If you read the 10-Q, we started actively participating in that. We bought about $800,000 or $900,000 worth of stock back in the first quarter. That's it. Any questions? We're also diversified in our distribution channel as well, having redundant distribution centers. we're also diversified in our distribution channel as well having redundant distribution centers We do use distributors for all of our international sales. we do use distributors for all of our international sales We have distributors in Canada, U.K., Europe, Germany, we also have our own manufacturing facilities, which we've already touched on. we have distributors in canada u.k europe germany we also have our own manufacturing facilities which we've already touched on Quarterly dividend increase announced last month, by the way, we're at 1.8% future dividend yield. quarterly dividend increase announced last month by the way we're at 1.8% future dividend yield We have a share repurchase program in place, we started in the 10-Q. we have a share repurchase program in place we started in the 10-q If you read the 10-Q, we started actively participating in that. if you read the 10-q we started actively participating in that We bought about $800,000 or $900,000 worth of stock back in the first quarter. we bought about $800,000 or $900,000 worth of stock back in the first quarter That's it. that's it Any questions? any questions

Speaker 4: You're unusual in that you own your own manufacturing. Dare I say you're unique in that. Just talk about that strategically going forward. You're unusual in that you own your own manufacturing. you're unusual in that you own your own manufacturing Dare I say you're unique in that. dare i say you're unique in that Just talk about that strategically going forward. just talk about that strategically going forward

Speaker 3: Yeah. Jason, you can fill in since I'm on the mic. It is a big competitive advantage to have your own manufacturing. It does create a lot of headaches. Our ability to react to things is much quicker than a lot of our peers have when they rely on partners to source all their product. A couple examples of this. We've seen this with the pandemic when everybody got stimulus money, everybody was chasing inventory. We got inventory to customers faster because of that. It's also allowed us to play this tariff game significantly differently. We've been doing that, we've been in, well, 40 years down in Puerto Rico and Dominican Republic, and it's a great advantage to have. Partially the military business, we have to make those in Puerto Rico as well. Yeah. yeah Jason, you can fill in since I'm on the mic. jason you can fill in since i'm on the mic It is a big competitive advantage to have your own manufacturing. it is a big competitive advantage to have your own manufacturing It does create a lot of headaches. it does create a lot of headaches Our ability to react to things is much quicker than a lot of our peers have when they rely on partners to source all their product. our ability to react to things is much quicker than a lot of our peers have when they rely on partners to source all their product A couple examples of this. a couple examples of this We've seen this with the pandemic when everybody got stimulus money, everybody was chasing inventory. we've seen this with the pandemic when everybody got stimulus money everybody was chasing inventory We got inventory to customers faster because of that. we got inventory to customers faster because of that It's also allowed us to play this tariff game significantly differently. it's also allowed us to play this tariff game significantly differently We've been doing that, we've been in, well, 40 years down in Puerto Rico and Dominican Republic, and it's a great advantage to have. we've been doing that we've been in well 40 years down in puerto rico and dominican republic and it's a great advantage to have Partially the military business, we have to make those in Puerto Rico as well. partially the military business we have to make those in puerto rico as well We make those in Puerto Rico made in the USA for all the requirements for the U.S. government. We make those in Puerto Rico made in the USA for all the requirements for the U.S. government. we make those in puerto rico made in the usa for all the requirements for the u.s government

Speaker 1: I think we've always been in manufacturing. Since the company started, it was a manufacturing company, and having those facilities in the Dominican and Puerto Rico really produced, only produced leather goods. In the acquisition in 2021, the factory in China, that's mainly, it's really all rubber product. The education we're learning on that manufacturing to help us now, we are actually moving some of that production to the Dominican. We'll see what happens with China. That factory's amazing. They do such a great job. I think just to reiterate what Tom said, too, having the control, because if we need something tomorrow, our other sourcing partners aren't going to stop what they're doing to help us. I think we've always been in manufacturing. i think we've always been in manufacturing Since the company started, it was a manufacturing company, and having those facilities in the Dominican and Puerto Rico really produced, only produced leather goods. since the company started it was a manufacturing company and having those facilities in the dominican and puerto rico really produced only produced leather goods In the acquisition in 2021, the factory in China, that's mainly, it's really all rubber product. in the acquisition in 2021 the factory in china that's mainly it's really all rubber product The education we're learning on that manufacturing to help us now, we are actually moving some of that production to the Dominican. the education we're learning on that manufacturing to help us now we are actually moving some of that production to the dominican We'll see what happens with China. we'll see what happens with china That factory's amazing. that factory's amazing They do such a great job. they do such a great job I think just to reiterate what Tom said, too, having the control, because if we need something tomorrow, our other sourcing partners aren't going to stop what they're doing to help us. i think just to reiterate what tom said too having the control because if we need something tomorrow our other sourcing partners aren't going to stop what they're doing to help us I can stop that factory and say, "No, make this." It really is beneficial, especially when Tractor Supply calls and says, "I need an extra 50,000 pair." I'm like, "Okay, we'll get on it. I can stop that factory and say, "No, make this." It really is beneficial, especially when Tractor Supply calls and says, "I need an extra 50,000 pair." I'm like, "Okay, we'll get on it. i can stop that factory and say "no make this." it really is beneficial especially when tractor supply calls and says "i need an extra 50,000 pair." i'm like "okay we'll get on it

Speaker 4: The capital commitment, employee commitment, and all that excuse me, justifies your owning it yourself? The capital commitment, employee commitment, and all that excuse me, justifies your owning it yourself? the capital commitment employee commitment and all that excuse me justifies your owning it yourself

Speaker 1: Yes. Yes. yes

Speaker 3: Yeah, no. Yeah, no. yeah no

Speaker 1: I'm sure- I'm sure- i'm sure-

Speaker 4: That's a loaded question. That's a loaded question. that's a loaded question

Speaker 1: Right. It's a lot. Right. right It's a lot. it's a lot

Speaker 3: 1,000 employees. 1,000 employees. 1,000 employees

Speaker 1: 1,000 employees. I mean, our employees, but 1,000 employees there. Puerto Rico's probably got 400. 1,000 employees. 1,000 employees I mean, our employees, but 1,000 employees there. i mean our employees but 1,000 employees there Puerto Rico's probably got 400. puerto rico's probably got 400

Speaker 3: 400. 400. 400

Speaker 1: China's probably got 400. China's probably got 400. china's probably got 400

Speaker 3: 400 or 500. 400 or 500. 400 or 500

Speaker 1: You're right, it is significant. We're able to build those products there and get those at a cheaper price than when we source it from someone else. You're right, it is significant. you're right it is significant We're able to build those products there and get those at a cheaper price than when we source it from someone else. we're able to build those products there and get those at a cheaper price than when we source it from someone else

Speaker 3: It also allows us to source product better. It also allows us to source product better. it also allows us to source product better

Speaker 1: Yeah. Yeah. yeah

Speaker 3: We know what to look for. We know when we get a bill of materials, or we go to another factory to source a product, we know what the labor cost is in Asia to make that product. We know exactly what the raw materials cost. I think it gives us a better education as well. The capital expense, in footwear, there are certainly capital expenses with it, but it's not as meaningful as you think because the equipment lasts so long. We've got DESMAs. There's a DESMA in the Dominican Republic that was moved from Ohio over 30 years ago. It's not as capital intensive. If you look back at our CapEx, we're running less than 2% of sales for CapEx. We know what to look for. we know what to look for We know when we get a bill of materials, or we go to another factory to source a product, we know what the labor cost is in Asia to make that product. we know when we get a bill of materials or we go to another factory to source a product we know what the labor cost is in asia to make that product We know exactly what the raw materials cost. we know exactly what the raw materials cost I think it gives us a better education as well. i think it gives us a better education as well The capital expense, in footwear, there are certainly capital expenses with it, but it's not as meaningful as you think because the equipment lasts so long. the capital expense in footwear there are certainly capital expenses with it but it's not as meaningful as you think because the equipment lasts so long We've got DESMAs. we've got desmas There's a DESMA in the Dominican Republic that was moved from Ohio over 30 years ago. there's a desma in the dominican republic that was moved from ohio over 30 years ago It's not as capital intensive. it's not as capital intensive If you look back at our CapEx, we're running less than 2% of sales for CapEx. if you look back at our capex we're running less than 2% of sales for capex

Speaker 1: If you wanted to open a factory, you had. If you wanted to open a factory, you had. if you wanted to open a factory you had

Speaker 3: Yeah. Yeah. yeah

Speaker 1: To buy all that equipment, yes, it's very capital. Every year we add new machines, we add new sewing machines, we add new whatever. Yeah. It's a great question. To buy all that equipment, yes, it's very capital. to buy all that equipment yes it's very capital Every year we add new machines, we add new sewing machines, we add new whatever. every year we add new machines we add new sewing machines we add new whatever Yeah. yeah It's a great question. it's a great question

Speaker 3: Yeah. Yeah. yeah

Speaker 1: It's real, for sure. It's real, for sure. it's real for sure

Speaker 3: Any other questions? Bill. Any other questions? any other questions Bill. bill

Speaker 5: The XTRATUF direct to consumer. The XTRATUF direct to consumer. the xtratuf direct to consumer

Speaker 3: Yep. Yep. yep

Speaker 5: What's that rate of growth relative to the rate of growth of wholesale at XTRATUF? What's that rate of growth relative to the rate of growth of wholesale at XTRATUF? what's that rate of growth relative to the rate of growth of wholesale at xtratuf

Speaker 3: XTRATUF in the fourth quarter of last year grew online 100%. It's growing faster than- First quarter was in the 70%, 60, 70%. XTRATUF in the fourth quarter of last year grew online 100%. xtratuf in the fourth quarter of last year grew online 100% It's growing faster than- First quarter was in the 70%, 60, 70%. it's growing faster than- first quarter was in the 70% 60 70%

Speaker 5: The wholesale? The wholesale? the wholesale

Speaker 3: Wholesale around high teens. Wholesale around high teens. wholesale around high teens

Speaker 5: Both periods? Both periods? both periods

Speaker 3: Yeah. Yeah. yeah

Speaker 5: Great, thanks. Great, thanks. great thanks

Speaker 3: We've applied for our refund, we didn't talk about that, for the tariff refund. That's about $20.5 million we're working to get back. We're starting to get a couple pieces and bits of it, but they're making it very difficult. We've applied for our refund, we didn't talk about that, for the tariff refund. we've applied for our refund we didn't talk about that for the tariff refund That's about $20.5 million we're working to get back. that's about $20.5 million we're working to get back We're starting to get a couple pieces and bits of it, but they're making it very difficult. we're starting to get a couple pieces and bits of it but they're making it very difficult

Speaker 1: The system works really well. The system works really well. the system works really well

Speaker 3: Anything else? Awesome. All right, well, thanks, everybody. Anything else? anything else Awesome. awesome All right, well, thanks, everybody. all right well thanks everybody

Speaker 1: Thank you, guys so much. Thank you, guys so much. thank you guys so much