While other executives scaled back during the pandemic, Jason Brooks, president and CEO of publicly traded Rocky Brands Inc., was in expansion mode.
In mid-March, the executive closed on a $230 million deal with Honeywell International Inc. for a portfolio that included The Original Muck Boot Company, Xtratuf, Servus, Neos and Ranger.
Brooks told FN that the rubber boot brands, helmed by industry veteran Craig Reingold, dovetailed well with Rocky’s existing portfolio. “We wanted something that complemented our business and that we understood,” he said. “I didn’t want to get too far away from what we do. But we also didn’t need another brown leather boot company.”
Though Brooks admitted it will take time to integrate the two companies — it’s adding 500 new employees to the team — he predicted that the acquisition will be accretive “if not in the first year, then definitely the second.”
Rocky Brands, like others in the workwear business, has been one of the stronger performers throughout the pandemic. For its fiscal 2020, net sales increased 2.6% year-over-year, totaling $277.3 million, with an adjusted net income of $23.1 million. Its results were driven by a 3.4% rise in wholesale revenue and 12.4% jump in retail sales, offset by a steep drop-off in its military business, which declined 27.6%.
Here, Brooks shares more about the makings of his first big buy.
How did this deal come about?
Jason Brooks: “At the end of 2018, we started looking for an acquisition to grow the entire corporation a little quicker. I’ve always admired Muck Boot and felt the product and marketing were great. So when our CFO, Tom Robertson, and I would meet with investor groups, I would always say, ‘If Honeywell ever wants to sell Muck, we would be interested in that.’ In February 2019, we started talking with B. Riley Financial about opportunities and one of their associates reached out [to Honeywell]. At the time there was no interest, but then in late 2019-early 2020, the conversation changed and they put together a package of brands.”
What do you like about these properties?
JB: “We were mainly interested in Muck, but they also included Xtratuf, which is an exceptional brand as well. Its roots are in Alaska, and it’s still a very functional product — the fishermen on ‘Deadliest Catch’ wear it — but I have a 21-year-old in college and he asked for a pair of Xtratuf boots for Christmas. So we’re seeing some fashion demand there, which is exciting and scary all at the same time. Neos is an interesting brand that’s been underserved. There may be some real opportunity there. And Ranger is a really good basic industrial product that I think we can also capitalize on, especially through our Lehigh division.”
With 2020 being what it was, did you have any doubts about moving forward with the deal?
JB: “Oh, yeah, it was a major roller coaster. As COVID hit the U.S., everybody stopped and Honeywell said, ‘We’re still considering this, but we’ve got to focus on our business.’ It was the right thing to do because we were all so unsure of what was happening and where it was going. For Rocky, Q2 was an interesting quarter. Our business struggled just like everybody, but we also were fortunate because our customer base was considered essential. So we were able to maintain our inventory and we did not lay off or furlough a person in the company.”
How is the integration going?
JB: “This is my first acquisition as CEO, and God forbid I would have picked an easy one, right? We’ve hired a consulting firm to help us through this migration process that’s going to take many months — maybe even nine months — for us to implement it. This division was integrated within Honeywell’s inner-workings, so it’s going to take time to get them off [Honeywell’s] system and onto ours. For 2021, the key word is patience. It’s going to be complicated, but at the end of the day, I am confident that [these businesses] we’re adding are exceptional.”
Will the group still be based in Massachusetts?
JB: “Yes. I see no reason why they won’t just work from there and continue to do the best job they can. I expect it’s going to create some jobs here in Ohio from a distribution standpoint. And our HR, finance and IT departments are going to have to beef up. But if there’s a positive that came out of COVID [and remote work] this year, it’s that it allowed us to expand our marketplace for people.”
Are there any initiatives in the works for Rocky, Georgia Boot and Durango?
JB: “There’s nothing out of the ordinary. Our brands are strong, and we saw very nice growth in them last year, so I believe we’ll continue to see that in 2021. We don’t want to get caught up in things over here on the left or right. We just need to be patient and stay focused on the strategies that work for us.”