Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Rocky Brands Fourth Quarter Fiscal 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. [Operator Instructions]. I would like to remind everyone this conference is being recorded. I will now turn the conference over to Brendon Frey of ICR. Go ahead Brendon.

Thank you, and thanks to everyone joining us today. Before we begin, please note that today's session including the Q&A period may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Such statements are based on information and assumptions available at this time and are subject to changes, risks and uncertainties, which may cause actual results to differ materially. We assume no obligation to update such statements. For a complete discussion of the risks and uncertainties, please refer to today's press release, our reports filed with the Securities and Exchange Commission, including our 10-K for the year ended December 31, 2014. And I'll now turn the conference over to David Sharp, President and Chief Executive Officer of Rocky Brands.

Thank you, Brendon. Joining me on the call today is Jim McDonald, our Chief Financial Officer. As you saw from our earnings release, it was a challenging fourth quarter. We were up against a tough comparison as 2014's Q4 was a record sales quarter for the company helped by cold weather which drove strong demand for our work and hunting categories. Unfortunately this year we experienced the opposite conditions as temperatures were at or near record highs in many areas of the country. We are obviously disappointed in our top line performance and the impact it had on fourth quarter profitability. I'd like to spend the majority of the call talking about the growth initiatives we are focused on in 2016. But I'll first begin with a brief review of the fourth quarter. Not surprisingly, the shortfall came from the two most weather sensitive areas of our business, from softer sales of our work and hunting boots. Both categories were down double digits on a percentage basis year-over-year as sell-through at retail was more modest than planned and impacted our replenishment business during the quarter. In addition to the impact warm weather had on the boot category in general we continue to feel the indirect effects of the slowdown in domestic oil and gas production in certain regions. While we market only a few products specifically intended for that industry, the loss of jobs from the decrease in oil prices is having a ripple effect across many local economies throughout the Midwest, from Texas up to North Dakota, where a large number of our consumers live and shop. Unfortunately our western category, which was up through the first nine months of the year was not immune to the same challenges that affected work and hunting sales in the fourth quarter.…

Thanks, David. Net sales for the fourth quarter decreased 17.3%, $65.3 million compared to $78.9 million for the corresponding period a year ago. Wholesale sales for the fourth quarter decreased 25% to $46.5 million compared to $62 million last year. Retail sales for the fourth quarter decreased slightly to $13.5 million compared to $13.7 million a year ago. And military segment sales increased 64% to $5.3 million versus $3.2 million in the same period in 2014. Gross profit in the fourth quarter was $22.2 million or 33.9% of sales, compared to $27.6 million or 35% of sales for the same period last year. The 110 point basis decrease was driven primarily by a higher percentage of military sales which as David mentioned earlier had lower gross margins than our wholesale and retail segments. Selling, general and administrative expenses were $20.2 million for the fourth quarter of 2015 compared to $20.7 million in the year ago period. The $0.5 million decrease in SG&A was due to lower incentive compensation compared to a year ago. As a percentage of sales, SG&A increased 480 basis points to 31% compared to 26.2% last year, primarily due to lower sales compared to a year ago. Income from operations was $1.9 million or 3% of net sales compared to $7 million or 8.8% of net sales in the prior year period. For the fourth quarter, interest expense was $167,000 compared to $246,000 last year. Net income for the quarter was $1.4 million or $0.18 per diluted share compared to $4.5 million or $0.59 per diluted share last year. I will just quickly touch on the full year results. Net revenue for 2015 decreased 5.9% to $269.3 million which comes on top of the 17% increase we experienced in 2014. Full year net income was $6.6 million or $0.87 per share compared to net income of $9.8 million or $1.30 per share for fiscal 2014. Turning to the balance sheet, our funded debt decreased 34.7% or $12.6 million to $23.7 million at December 31, 2015 compared to $36.3 million at December 31, 2014. During the year, we paid out $3.3 million to shareholders in quarterly dividends. Inventory decreased 9.7%, or $8.2 million, to $77 million at December 31, 2015 compared with $85.2 million at December 31, 2014. I’ll turn the call back to David for his closing comments.

Thank you, Jim. Before we open the call to questions. I want to thank our group of dedicated employees. You addressed our recent challenges head on and are working diligently to improve on our recent performance. There's a lot of positive energy running through our organization, which adds to my confidence level about what is in store for our company in 2016 and the years ahead. Operator, we’re now ready for questions.

Thank you very much David. At this time we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Jonathan Komp from Robert W. Baird. Please proceed with your question.

Hi, thanks guys. David or Jim whoever wants to take it. Maybe the first question I have just looking at the quarter itself. I think a few months ago you signaled that the wholesale revenue decline might be similar to the third quarter, which was down 12% in terms of the top line. And I’m just wondering, when you look at the shortfall versus that type of level maybe if could parse out how much you thought was purely related to weather? And then separately maybe how much is related to other factors like Durango being a little softer?

Yes. So I think that the weather definitely affected our work and the shortfall in our work and hunting business and that was around $9.5 million versus the year before. And then the western was more related to sort of the oil catch dilemma. But I think that weather also has an impact, the western boots are for all and we do see a spiked user in December when the -- as the weather gets colder. And that was -- western was about $4.5 million of the shortfall.

Okay, great. And on that piece of just looking at Durango specifically. You sound maybe a little surprised by the shortfall. But is there anything you can point to more broadly with the western category from a passion perspective or any other broader trends that are a headwind right now or do you expect that business to come back pretty quickly?

We do expect the business to come back quickly. What we’re hearing from our core market retailers is that there soon is to be price resistance at $200 of a pair and that’s why in my prepared remarks I said I think that, if anything if there is a pairing of brands or styles, I think that we will weather that pretty well, because as we start to raise 150 to 180 to 200. So I think we are positioned well there. And there has been some talk about doing the job for us as far as western's considered in fashion. But we really don’t play there in terms of our distribution. We are widely distributed or mostly distributed in the core markets where folks -- where western is rather based on trends now. So I think that, we expect this to bounce back pretty nicely, particularly as we move through the year we’re going to be -- then we are showing frankly small comparisons.

Okay, got it. And then maybe just thinking more broadly about the wholesale business. You sound pretty optimistic about some of the initiatives of Creative Recreation and I’m just wondering when you add all the pieces between the growth for Creative Recreation and then maybe some bounce back in the weather impacted categories. Do you think the wholesale business can trend back towards the 2014 levels that you had in terms of the top line for that or I’m just trying to gauge maybe what type of growth you might be anticipating for the wholesale business given all the moving parts for 2016?

What we’re looking at really [is grow wholesale for all] and internally, we’re focused on growing the business in the high-single-digits.

Great, that’s helpful. And then maybe one more if I could just on the military business. Any thoughts on how to think about the new contracts that you have for 2016? I am just wondering, how much of that $31 million that’s contracted forward should be viewed as non-recurring if any or if that's kind of a new base line maybe beyond 2016?

No. This is what I know about that most of the vendors to U.S. military, are pretty much full. There soon is to be some demand beyond the vendors' capacities for this year, but we -- they haven't indicated us to yet whether those orders will fall, I know will go into '17. And we won't know more for several months, that's how 2017 is going to look. So most of these contracts that we have, do end at the end of this year.

Okay. Gentlemen, we have no further questions at this time. I'd now like to turn it back over to management for any closing remarks.

Okay. Well thank you very much ladies and gentlemen for joining us on this call this evening. We're poised to have a better report for you in Q1. Thank you again.

Ladies and gentlemen that does conclude today's teleconference. Thank you for your time and participation. You may disconnect your lines at this time and have a wonderful rest of your day.