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Rocky Brands ($RCKY) LBO Model
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($ in Millions)
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xAssumptionsxIncome Statement
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General:Growth:2014A2015A2016A2017E2018E2019E2020E2021E
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Days365Wholesale4.0%Wholesale$233.9 $206.1 $176.9 $184.0 $191.4 $199.0 $207.0 $215.3
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Tax Rate26.0%Retail1.0%% Growth-11.9%-14.1%4.0%4.0%4.0%4.0%4.0%
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CIRC0Military5.0%
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Transaction Fees2.0%Retail$44.3 $45.8 $45.9 $46.4 $46.9 $47.3 $47.8 $48.3
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Legal Fees1.0%Cost:% Growth3.3%0.3%1.0%1.0%1.0%1.0%1.0%
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Financing Fees0.5%
Gross Margin Improvement
0.3%
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Cash Interest1.0%SGA Improvement0.5%Military$8.0 $17.4 $37.4 $39.3 $41.2 $43.3 $45.4 $47.7
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Minimum Cash$3.0 % Growth117.9%114.6%5.0%5.0%5.0%5.0%5.0%
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Amortization of Financing Fees
5 Years
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Exit Multiple21.0x
Total Revenue
$286.2 $269.3 $260.3 $269.7 $279.5 $289.6 $300.2 $311.3
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Exit Year2021
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Hold Period5 YearsCOGS$189.9 $180.4 $183.5 $189.4 $195.4 $201.6 $208.1 $214.8
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xPurchase PriceGross Profit$96.4 $88.9 $76.7 $80.3 $84.1 $88.0 $92.1 $96.4
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Current Stock Price
$21.00 % Margin33.7%33.0%29.5%29.8%30.1%30.4%30.7%31.0%
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Premium15.00%
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Offer Price$24.15
Operating Expenses
$80.6 $78.4 $75.6 $77.0 $78.4 $79.8 $81.2 $82.7
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Basic Shares7.44% Margin28.2%29.1%29.1%28.6%28.1%27.6%27.1%26.6%
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Add'l Diluted Shares
0.04
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Equity Value$180.5 EBIT$15.8 $10.5 $1.1 $3.3 $5.7 $8.2 $10.9 $13.8
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Less: Cash(4.5)
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Plus: Debt14.6
Interest Expense
($0.9)($0.7)($0.6)$0.0 $0.0 $0.0 $0.0 $0.0
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Enterprise Value$190.6
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Other($0.1)($0.1)$0.1 $0.0 $0.0 $0.0 $0.0 $0.0
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Implied Entry Multiple
21.6x
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EBT$14.7 $9.7 $0.5 $3.3 $5.7 $8.2 $10.9 $13.8
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Returns:
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MOIC3.24xTax($0.9)($1.5)($2.1)($2.8)($3.6)
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IRR26.5%
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Net Income$2.4 $4.2 $6.0 $8.0 $10.2
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xDilution Schedule
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SharesStrike PriceShares ITMShare ProceedsShares Repurch.Net SharesD&A$6.9 $7.2 $7.7 $8.0 $8.3 $8.6 $8.9 $9.2
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Options 10.04$12.85 0.04$0.55 0.020.02% Margin2.4%2.7%3.0%3.0%3.0%3.0%3.0%3.0%
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Options 20.04$12.60 0.04$0.45 0.020.02
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Total0.04Capex$7.4 $8.7 $5.9 $6.1 $6.3 $6.6 $6.8 $7.1
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% Margin2.6%3.2%2.3%2.3%2.3%2.3%2.3%2.3%
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xFinancing Assumptions
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MultipleAmountInterest RateAmortizationEBITDA$22.7 $17.7 $8.8 $11.3 $13.9 $16.8 $19.8 $23.0
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Revolver0.0x$0.0 3.0%
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Term Loan3.0x$26.5 5.0%1.0%xBalance Sheet
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Senior Notes4.0x$35.3 7.0%2015A2016ADebitCreditPF 20162017E2018E2019E2020E2021E
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Total7.0x$61.7 Cash $3.4 $4.5 $3.0 ($4.5)$3.0 $3.0 $3.0 $3.0 $3.0 $3.0
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Accounts Receivable
45.3 42.8 42.8 44.3 45.9 47.6 49.3 51.2
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xSources & UsesInventories77.0 69.2 69.2 71.4 73.6 76.0 78.4 81.0
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Sources
Deferred Income Tax
1.0 1.6 1.6 1.7 1.8 1.8 1.9 2.0
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Cash from Balance Sheet
$4.5
Prepaid Expenses
2.5 2.4 2.4 2.4 2.5 2.6 2.7 2.8
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Revolver0.0
Total Current Assets
$129.2 $120.4 $118.9 $122.8 $126.9 $131.0 $135.4 $139.9
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Term Loan26.5 New Goodwill$45.4 $45.4 $45.4 $45.4 $45.4 $45.4 $45.4
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Senior Notes35.3
Plant, Property & Equipment
27.8 26.5 26.5 24.6 22.7 20.7 18.6 16.4
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Sponsor Equity138.5 Intangibles36.5 33.4 33.4 33.4 33.4 33.4 33.4 33.4
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Total Sources$204.7 Other Assets0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2
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Financing fees1.0 1.0 0.8 0.6 0.4 0.2 0.0
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xUsesTotal Assets$193.9 $180.6 $225.4 $227.2 $229.1 $231.1 $233.2 $235.3
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Purchase of Equity
$180.5
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Retire Debt14.6
Accounts Payable
$9.1 $11.6 $11.6 $12.0 $12.3 $12.7 $13.1 $13.6
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Transaction Fees3.8
Accrued Expenses
5.6 6.1 6.1 6.4 6.6 6.8 7.1 7.3
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Legal Fees1.9
Total Current Liabilities
$14.7 $17.7 $17.7 $18.3 $18.9 $19.6 $20.2 $20.9
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Financing Fees1.0
Long-Term Debt
23.7 14.6 (14.6)0.0 0.0 0.0 0.0 0.0 0.0
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Minimum Cash3.0 Revolver0.0 0.0 0.0 0.0 0.0 0.0 0.0
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Total Uses$204.7 Term Loan26.5 26.5 25.2 22.3 17.6 11.0 2.3
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Senior Notes35.3 35.3 35.3 35.3 35.3 35.3 35.3
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Purchase Price Allocation
Deferred Income Tax
13.0 13.0 13.0 13.0 13.0 13.0 13.0 13.0
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Purchase Price$180.5
Other Deferred Liabilities
0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2
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Less: Book Value(135.1)
Total Liabilities
$51.7 $45.5 $92.6 $92.0 $89.7 $85.6 $79.7 $71.6
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Plus: Existing Goodwill
0.0
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New Goodwill$45.4
Shareholders Equity
$142.1 $135.1 $132.8 ($135.1)$132.8 $135.2 $139.4 $145.4 $153.5 $163.7
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Total Liabilities & Shareholders Equity
$193.9 $180.6 $225.4 $227.2 $229.1 $231.1 $233.2 $235.3
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Check0.00.00.00.00.00.00.00.0
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B/S Assumptions
2015A2016A2017E2018E2019E2020E2021E
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A/R Days61606060606060
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Inventory Days156138138138138138138
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Deferred Income Tax %
0.4%0.6%0.6%0.6%0.6%0.6%0.6%
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Prepaid Expenses %
0.9%0.9%0.9%0.9%0.9%0.9%0.9%
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DPO18232323232323
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Accrued Expenses %
2.1%2.4%2.4%2.4%2.4%2.4%2.4%
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xCash Flow Statement
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2017E2018E2019E2020E2021E
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Net Income$2.4 $4.2 $6.0 $8.0 $10.2
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D&A8.0 8.3 8.6 8.9 9.2
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Amort of Debt Financing Fees
0.2 0.2 0.2 0.2 0.2
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Change in Accounts Receivable
(1.5)(1.6)(1.7)(1.7)(1.8)
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Change in Inventories
(2.2)(2.3)(2.4)(2.4)(2.5)
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Change in Deferred Income Tax
(0.1)(0.1)(0.1)(0.1)(0.1)
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Change in Prepaid Expenses
(0.1)(0.1)(0.1)(0.1)(0.1)
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Accounts Payable
0.4 0.4 0.4 0.4 0.4
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Accrued Expenses
0.2 0.2 0.2 0.2 0.3
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Cash Flow from Operations
$7.3 $9.2 $11.3 $13.5 $15.8
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Capex(6.1)(6.3)(6.6)(6.8)(7.1)
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Cash Flow from Investing Activities
($6.1)($6.3)($6.6)($6.8)($7.1)
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