Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Rocky Brands' Third Quarter Fiscal 2021 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. I would like to remind everyone that this conference call is being recorded. And I'll now turn the conference call over to Brendon Frey of ICR.

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 risk and uncertainties, please refer to today's press release and our reports filed with the Securities and Exchange Commission, including our 10-K for the year ended December 31, 2020. I'll now turn the conference over to Jason Brooks, Chief Executive Officer of Rocky Brands.

Thank you, Brendon. With me on today's call is Tom Robertson, our Chief Financial Officer. Like we experienced during the first half of the year, demand for our portfolio of leading brands was very strong during the third quarter, despite the demand and ample inventory. Soon after we completed the Boston Group's inventory from Honeywell's distribution center to our DC in Ohio in mid-August, which coincided with a record inbound supply deliveries and preparation for a strong finish to the year, we encountered unforeseen issues that have temporarily impacted our ability to fulfill all orders on time. I'm going to walk through the issues and the steps we've taken to improve the situation, and a timeline for returning to a steady state environment. Then I'll provide color on our brand and channel performance, which will give a better idea of the true demand in the quarter. After that, Tom will review the numbers in detail and provide an update on our outlook for 2021. When we completed the acquisition of Honeywell's performance and lifestyle footwear business in March, we knew there was heavy lifting to be done in integrating our two organizations before we could leverage the strength of the combined businesses to expand market share and drive enhanced profitability. While we completed the move of the acquired brands' inventory on schedule, soon after we ran into obstacles as we started processing a record number of orders in the Ohio DC. For context, we shipped over 50% more orders in the third quarter of 2021 versus Q3 of last year. But at the same time, the amount of product we received at the DC was up nearly 200% year-over-year. The congestion made it difficult to keep up with the strong demand. Integrating the Boston Group inventory with our distribution systems was not a direct map over due to differences in Honeywell and our order systems and our fulfillment process. Knowing it would require additional work to align the inventory with our fulfillment systems, we hired more workers and increased the number of shifts at our distribution center. Due to the tight labor market, it took longer than expected to onboard and train new staff which led to inefficiencies both in getting product in and out of the DC. While these issues are not fully behind us, we have made steady progress over the past 45 days improving the organization within the DC and are in a much better place operating at nearly double the capacity we were before the integration. Helping to alleviate some of the pressure, our new DC in Reno, Nevada went live on October 8. We currently expect the Reno DC to be fully up and running during the first half of next year. This will give us a combined 655,000 square feet of space, and the ability to house approximately 4.5 million pairs of footwear. Despite the impact from the temporary fulfillment challenges, there were a number of positives in the third quarter. Similar to the last earnings call, I'm going to discuss our Ohio and Boston Group separately. In addition to sales results, I'm also going to provide some color on orders and sell-through performance, which will give everyone a much better idea of the underlying strength of our business. Starting with our Ohio group, orders for the third quarter were approximately up 26% versus the same period last year. However, sales increased by 8%, reflecting the impact from delayed fulfillment. The recent performance of our Ohio group has been driven by strong demand in both our wholesale and retail segments. Beginning with wholesale, our western business grew 17% year-over-year, as demand for the Durango brand remains at an all-time high. Several key customers across traditional western and farm and ranch retail contributed to Durango's performance, as each posted strong double-digit growth year-over-year. The brand continues to become more and more meaningful in true western categories, which is driven by strong sell-through and helping to secure additional shelf space throughout 2021. With the weather recently starting to turn colder and rodeo season getting into full swing, many of our western accounts are seeing a nice pickup in boot sales. While logistics and other global supply chain disruptions limited Durango's potential growth in the quarter, we continue to hear that we are navigating the current situation much better than the majority of our peers. Turning to Work, Georgia experienced notable growth with farm and ranch stores, driven largely by demand for the brand's AMP LT collection of boots, including the addition of women's products at several accounts. The introduction of the new AMP LT styles contributed to a record-breaking fall booking season and new shelf space for the brand. Based on recent performance, customer feedback, and consumer ratings, we are confident we'll be able to continue strengthening and broadening distribution for this comfort-based work platform. The Rocky brands, which span work, outdoor, western, and commercial military, had a number of positive wins during the quarter, despite the growth being hampered by disruption and supply chain headwinds. These challenges probably had the biggest impact on the brand's outdoor businesses, as some of the key products for the fall season, especially new styles, were difficult to procure and deliver on time. Thankfully, we were carrying inventory of many traditional bestsellers, including our very popular sport pro and sport utility product. The biggest highlight of the season has been the introduction of our new Mountain Stalker Pro premium hunting, trekking boot, which has provided the brand entry into the technical mountaineering category with a great product at a more accessible price point, something our retail partners are very excited about. Rocky Western continued its strong trend upward despite the supply and distribution challenges. Ordering new products early and carrying over additional inventory has allowed Rocky to capitalize on competitor struggles and build on existing programs and gain new shelf space. Though sales were strong with traditional bestsellers, it was the new product that primarily drove the increase for Rocky Western. Like Western, Rocky Work was able to grow even in the face of the temporary disruption, due in large part to the explosive growth of the industrial athletic program that has brought in a lot of new business. This includes exclusive products for Zappos that we delivered during the third quarter and has been selling through quite well. Turning to our retail segment, following a 50% increase in e-commerce sales in Q3 of 2020, this channel was down by low single digits this year, reflecting the combination of a tough comparison and our delay in processing a portion of online orders on time. As comparisons further ease, and we return to our normalized shipping state, we expect to see e-commerce sales resume growth, fueled by the work we've done enhancing the functionality of our sites and expanding our direct-to-consumer efforts to marketplaces, particularly Amazon, and more recently, Target Plus and eBay. Meanwhile, Lehigh continues its recovery from the height of the pandemic. Sales increased by 23% over last year, driven by both higher account retention and new accounts, including Stryker Corporation, Estes Express Lines, and Schnitzer Steel that launched in Q3. The business is still facing some headwinds from COVID-19 related to accessibility issues and now third-party product delays stemming from supply chain challenges. However, our Cruise Line business, which was nearly dormant for 18 months, has started to show signs of recovery, while our new email and SMS strategy continues to improve account participation rates and drive revenue per account. Shifting now to our Boston Group, total orders increased 46% as demand for Muck and XTRATUF is high and continues to grow. Unfortunately, the shipment and inventory challenges have disproportionately hampered the group's Q3 success, resulting in sales being down by 31%. The positive here is that unlike other vendors, our customers have not been canceling open orders, which gives us an excellent opportunity to capitalize on replenishment in Q4. To do this, we are focused on alternative shipping options like cross-docking and container shipment opportunities to drive inventory to accounts. In terms of the integration as discussed earlier, we are making good progress toward returning our Ohio DC to its historical state of efficiency. We remain confident that with the investments we've made in technology and people, along with the new Reno DC, we will be able to realize important savings over time by significantly lowering fulfillment costs for the Boston Group brand. We are also on track with migrating the acquired business off Honeywell's ERP system and onto Rocky's by the end of this year. This step is critical to providing our newest brands, customers, and consumers with the world-class service we've been executing at Rocky for years. While I'm disappointed in the temporary setback we encountered during the third quarter, I am confident that we are taking the necessary actions to restore our advanced fulfillment capabilities and fully capture the true demand we are experiencing for our portfolio of leading brands. With the significant growth opportunities we are creating for the business, the long-term future for the company has never been brighter. I'll now turn the call over to Tom.

Thanks, Jason. As Jason outlined, growing demand was hampered this quarter by integration-related distribution challenges. While sales compared to the previous record quarter were challenged, net sales for the third quarter increased 61.4% year-over-year to $125 million, with wholesale sales increasing 70.3% to $96 million, retail sales increasing 35.3% to $21.8 million, and contract manufacturing sales by 45.1% to $7.7 million. The third quarter of this year includes $41.6 million in sales from the acquired brands or Boston Group, with approximately $37 million falling in our wholesale segment and $4 million in the retail segment. Turning to gross profit, for the third quarter gross profit increased 57.4% to $47 million, or 37.4% of sales compared to $29.8 million or 38.4% of sales in the same period last year. Adjusted gross margin this quarter, which excludes a $900,000 inventory purchase accounting adjustment, was $47.8 million or 38.1% of net sales. The 30 basis points decrease to adjusted gross margin was primarily attributable to lower wholesale segment margins due to an increase in USA manufacturing and sourcing costs associated with the acquired brands, and a lower mix of retail segment sales compared with the same period a year ago, which carry higher gross margins than our wholesale and contract manufacturing segments. Gross margins by segment were as follows; wholesale 36.1%, retail 49.9%, and contract manufacturing 18.8%, with adjusted gross margins for wholesale at 37.0%. Operating expenses were $44.2 million or 35.2% of net sales for the third quarter of 2021 compared to $20.2 million or 25.9% of net sales last year. Excluding $2.9 million in acquisition-related amortization integration expenses, third quarter 2021 operating expenses were $41.3 million or 32.9% of net sales. The increase in operating expenses was primarily driven by the expenses associated with the brands we acquired in March of this year. Income from operations decreased to $2.8 million, or 2.2% of net sales, compared with $9.7 million or 12.4% of net sales in the year-ago period. Adjusted operating income, which excludes the inventory purchase accounting adjustment and acquisition-related expenses in Q3 2021, was $6.5 million or 5.2% of net sales. For the third quarter of this year, interest expense was $3.4 million, compared with essentially no interest expense in the year-ago period. The increase reflects interest payments on the senior term loan and the credit facility we use to fund the Honeywell footwear acquisition. On a GAAP basis, we reported a net loss of $400,000, or $0.05 per diluted share, compared to net income of $7.6 million, or $1.04 per diluted share in the third quarter of 2020. Adjusted net income for the third quarter of 2021 was $2.5 million or $0.34 per diluted share. Turning to our balance sheet, at the end of the third quarter, cash and cash equivalents stood at $12.9 million and our debt totaled $238.8 million consisting of $130 million senior secured term loan facility, and borrowings under our senior secured asset-backed credit facility. As of September 30, 2021, we had $35.9 million of borrowings available under our credit facility. Inventory at the end of the third quarter was $202 million, compared to $80.7 million in the year-ago period. The $121.5 million increase includes approximately $90 million associated with the acquired brands and approximately $30 million from orders that did not ship on schedule this third quarter. Due to the impact of our second-half results from the congestion in our distribution center, we are updating our outlook. For the fourth quarter, we currently expect net sales to be in the range of $155 million to $165 million and full-year net sales between $500 million and $510 million. By group, we are now expecting Ohio group net sales for 2021 to grow between 15% and 20%, compared to our previous outlook of approximately 24%. While our Boston group, we are now expecting full-year net sales to be flat to up 5% versus our previous forecast of approximately 20%. As a reminder, we will only recognize 80% of the Boston Group sales, based on the timing of the acquisition in March of 2021. As Jason discussed earlier, the temporary shipping and fulfillment issues we are experiencing disproportionately impacted the acquired brands. That concludes our prepared remarks. Operator, we are now ready for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from Susan Anderson with B. Riley. Please proceed with your question.

Hi. It's Alec Legg on for Susan. Thanks for taking our question. A question on the inventory, you mentioned around $30 million did not ship this quarter. Was that all in wholesale? Or was there some retail component in that too? And how much of that inventory that did not ship is seasonal? And what is the risk that the wholesale accounts reduce or even pull their orders related to that?

Yeah, so I'll start and then Jason can hop in. So of the $31 million, it's almost all exclusively the wholesale business. There certainly was some impact of retail, but our retail business was not really nearly as behind the wholesale business. So that would be almost all exclusively wholesale. As for cancellations, we're not seeing a lot of cancellations. And we recognize that we were having the issues in the distribution center. So, we did our best to prioritize what inventory we did have in stock that was more seasonal, such as hunt products that needed to be out the door for hunting season. So, we did our best to prioritize that. But again, we're not seeing a significant amount of cancellations in the retail partners of ours still like the product.

Yeah. And Alec, I would just add on that. From the seasonal standpoint, obviously, we sell insulated hunting boots, work boots. I think, because of the environment that we are living in right now, retailers are not willing to cancel orders, they want the inventory when they can get it. And so we're a little behind. Or they may tell you we are a lot behind, but at least we're getting some boots out the door. And so as Tom indicated, we just haven't seen that happen. And we believe that our product is still sellable, as we go into the beginning of the year, even if you want to store it in your back room and sell it next fall.

Perfect. Thank you. And then a quick follow-up. What inning would you say you are in with the integration of Honeywell's brands and their inventory? And I guess what work needs to be done and what's already done?

Yeah, so all of the inventory is now either in our Logan DC or as we indicated on the call, we did open up the Reno DC. So we have inventory in both places. We are 100% out of the Honeywell DC, and everything is being processed through our own DC. We did also say in the report that we are on track to be off of Honeywell's ERP system by the end of the year. And I'm happy to say that that is still on track right now. And I feel very confident that we'll be able to accomplish that and be done by the end of the year. But the inventory is out. And as we said, in the middle of August, really in all of September, this congestion happened. And so we worked really 24/7 to try to eliminate or resolve the issues. We have been able to slowly, unfortunately slower than I had hoped been able to move back to a more realistic shipping capability. But we still have some ways to go. We got to get through this year. I think the Reno DC will be helpful next year, but probably not until mid-late Q1 as a fully functioning DC. We are seeing pretty major labor issues out there and trying to hire people, which is no surprise anywhere to anybody in the world right now. But I feel comfortable that we are moving in the right direction and that we are able to ship better today than we were a week ago and two weeks ago and three weeks ago.

Yeah, just to give a little clarity there specific on the distribution numbers. So if you look back in August, things kind of hit their highs - the peak of congestion and issues with the integration. So, we're very excited, as Jason put it, we've made progress every week. And, in the month of October, we shipped over two times what we shipped in August just from a pair standpoint. And so we know that we can do better and even where we're at in October, and we need to do more efficiently. And so we think that while Reno was up and functioning, it will not be - there are issues with getting some of the equipment and automation put in. So we're still functioning out of Reno, it just won't be up to our standards to the beginning to, I guess, the middle to end of the first quarter.

Thanks, Jason, Tom. Very helpful.

Thank you. Our next question is from Camilo Lyon with BTIG. Please proceed with your question.

Thank you. Good afternoon. I'd really love to just understand a little bit in greater detail what exactly the issues were. I know that there were issues initially when you received the Boston Group inventory, that it was packaged differently. So that had to - I think you had to go through a whole kind of reboxing of the shoes with plastic bags. And if you could just help us understand what exactly the issues were and what really needs to happen for you to start operating at the level of efficiency that you expect to?

Yeah, so I'll start and I'm sure, Tom, we've been in this pretty heavy. So I'm sure Tom will have something to add. It's really about multiple pieces to this issue, right. So you think about the inventory coming in and as you stated, the idea around the boxes and the UPC codes, and how it was different than our warehouse being set up versus their warehouse. And so that was really kind of one piece. Our DC was also set up to be more of a sort and pack kind of DC because we were capable of doing it that way. So a customer would call and fill in with us every week, and we would ship them 24, 72, 124 pairs. And as we started to get the inventory in, what we learned is that the Honeywell business was more done on larger case pack orders. And the case packs were also in either three packs or four packs, and our case packs were in six packs. And so the way you had to put the inventory into the DC was not as efficient. So I had to pull two three packs back to back, where if I needed that case pack of six, I'll now have to pull two where in ours we could just pull one. And I know it doesn't sound like a lot, but it is inefficient to have to pull two of those versus one. The other issue we saw was really the inbound inventory. And not only the Rocky inventory that was coming to Logan, but obviously the Muck and XTRATUF, Servus, and NEOS brands were also starting to come to Logan. And as they came, we were not receiving shipment notices about them. And so we would have to take those containers, unload them put a new label on them based on an inventory report that we got. And that took more time than our Rocky Georgia Durango products. We just scan it and put it away. So taking the labels, putting them on the boxes, and then putting them in the racking was taking more time. And then the inconsistency in the way those containers would show up. So normally, we would have a pretty normal flow right, a couple three, four, five, six containers a day. Well with the logistics problem that everybody is aware of right now, what we would get is 10 containers today, and then no containers for two days, and then 30 containers. And so we have a lot of backup around that. And then the third piece that really affected us was the people thing. We were not able to hire as quickly as we had hoped. We started this process of hiring these people long before August, knowing that we were moving the inventory and the deal closed in March. But it took us longer to hire those people and then getting those people up to speed at the level of capability. Well, it's taking a little bit longer or was taking a little bit longer. So I think those are kind of the problems. So we've been able to rearrange the DC and become more efficient with the organization in the DC, so that's helped. We now have all the boots in there, they're labeled the way we need them, they're working through our processes the way we need them. And then obviously, the people are getting better every day. And then one final thing that I'll say, and I think I mentioned in my notes, we have done - the Boston Group has done an exceptional job of changing containers that would come to our DC and they are shipping them direct to customers. And that was a process that they did not have the ability to do within Honeywell for whatever system constraints, not a big deal. But we are able to do that. And so we are finding ways to divert those containers. And that team has done a really great job working with the logistic team to make that happen.

Yeah, I mean, I think, look, we could spend hours talking about everything about the distribution center. But I think I want to touch a little bit on one of the points Jason made. And so, if we think back how the Boston Group product was all distributed, it all ran through one distribution center, every single order, the U.S. ran through one distribution center. And as Jason alluded to, they had system limitations where they couldn't ship containers directly to their customers. And so if we think about, take a step back, prior to the acquisition and today, the Ohio group business, if we have large seasonal orders, we ship those directly from either our own factories or third-party source factories, from the factory to the customer. And so that different order sets is really challenging on a distribution center, especially our distribution center, which was set up for replenishments that Jason touched on. And so the really great news here is that a lot of these bigger order sets that we have with the Boston Group, as of today, we can now process those orders through our system. And there’s going to be some lag on this, because we have a lot of inventory coming at us. But in the future state, those really large seasonal items will not even go through our distribution centers, they'll go straight from the source factory to the customer. So that'll be a big improvement. And we actually think that the Boston Group product, the nature of the Boston Group orders, is more suitable for that direct fulfillment method. And so we're excited to see how much pressure that can alleviate off the warehouse as we move into 2022.

Thank you for that detail. That's really helpful. Is it helpful to maybe quantify maybe on a week's basis, how much these delays created on a week basis of inventory? And where you're at today with that? I think you answered in the prior question that you've prioritized shipping out a lot of seasonal goods. So it doesn't sound like you're overly concerned with kind of missing a particular part of the season right now with the inventory that you have. So is it feasible to expect that you'll recoup bulk of this this quarter and into next? Or how do we think about that chunk of deliveries that were expected and ordered but not fulfilled?

Yeah. So I think, as we said earlier, we've not really seen significant cancellations. There have been some, again, we prioritized the seasonal products that we could. We're continuing to try to prioritize probably product that's due to retail for Black Friday. And so we're focused on that. And I think if you just look at the overall marketplace, it's kind of an out of stock economy, right. And so, we know that a lot of our partners and our peers, while they're having different supply chain issues than us, there's not a whole lot of substitutes. And so, we know there's demand, the demand is not the issue for the product. For us, the demand is just getting it out of the distribution center. And I think it's important to call out that, I think we've kind of proven that our supply chain can be quicker and more efficient than some of our peers, given our vertical integration and our nearshore sourcing with the Caribbean with the Dominican and Puerto Rico. And so, I think that we've kind of proven we had the inventory and we had the demand. We just didn't get it out the door fast enough. And so that's where the focus is now getting out the door. I do think we don't think we're going to catch up on all the missed sales in the fourth quarter, simply because demand is continuing to outpace the ability to distribute the product. And so that's why we gave some clear guidance for the fourth quarter. Inevitably, there will be carryover into Q1, but we are closely monitoring any cancellations for Q1. But again, we've not really seen any significant cancellations that got us concerned.

Yeah. I think just to add to Tom's point, in Tom's notes, he said Q4 was like $155 million to $165 million. And we feel pretty good about that. So picking up what was missed in Q3 is really not going to happen 100% in Q4 and is really probably going to roll into Q1 of next year. And to your question, the big question is, is anybody going to start canceling those pairs as we move forward? And we'll have to wait and see how that goes. But we feel pretty good about Q4. And again, we've been able to accomplish over the last month in October of shipping out of the DC. Again, it's not perfect yet, we still have a ways to go to make it as good as it was before the acquisition. But we're making progress.

Thank you for that color. As you kind of look at your list of integration tasks that remain, I think you discussed a little bit. But I want to dig in greater detail. Now that you've had the two groups in Ohio and with the DCs now trying to digest the incremental volume that's come on board, are there any other major integration issues that you now have better visibility or line of sight into that we should be aware of? Or was this the biggest kind of taking a python moment to try and digest this initial burst of inventory receipts that now you're getting better, you're getting more efficient, you're getting smarter, there's more people that have been hired, that a lot of these issues, at least are known and on the mend?

Yeah, I would tell you that we believe this is the biggest issue. And I don't even like to call it an issue because we were good at this. Like we were good, we were efficient, we shipped shoes well. If you recall, our DC is Amazon Prime, we got shoes in and out of that DC really well. And so it's really frustrating to be here. But I know these issues, and we have dealt through them. And now we just got to take the time to solve them. But from the rest of the integration to ERP, getting customers over, getting orders over, getting credit apps, getting all the other kind of monotonous stuff that I'm sure the team that's doing that would be angry with me right now about how I'm maybe pushing it off. But they've done an amazing job of working through that, our IT department has been working just crazy to get this done and get us off of their system. Our customer service department, there was a customer service division that came with the organization out of Mexico, they've been amazing. We've really done a pretty good job. It's this DC thing that, I hate to say, surprised me, because I don't like to be surprised. But we were good at this and we'll get good at it again.

Yeah, I think said another way, today, we've executed on almost our entire plan with the exception of the distribution of the product, which is something that we really prided ourselves on prior to this acquisition. And we know and it can be seen in the results leading up to the acquisition, so the few years leading up to the acquisition that we know we have the ability to do this. We just had to reset in a quarter and we've got to get some more capacity with another distribution center to get it off the door in a timely and efficient manner. So, we don't think this will be an issue that lingers for a very long time.

Great. Last question for me is, did you have any incremental costs or payments to Honeywell during the quarter? If so, what was that? And are you complete with those shared services costs?

Yeah. So I think I know you're speaking to, so yeah. So, we had TSA or transition services agreements with Honeywell. We are out of the vast, vast majority of those. The distribution was the largest one, which we got out of in the middle of August. And as Jason said earlier in the call, we will be completely out of by the end of the year. So there were certainly some significant duplicative costs in the third quarter. But if we look at the operating expenses, I mean, you had those duplicative costs, but we also were inefficient at the distribution center. We're still not as efficient as we think we should be. With the labor constraints, we had to go after more expensive temp labor and things such as that. And that not to mention with the top-line sales, we didn't really leverage our operating expenses. But we've got most of the duplicative costs out of the way, as we go into the fourth quarter. Again, we need to be more efficient from a distribution standpoint. But yeah, most of those costs are behind us.

Thank you, gentlemen. And good luck with the balance of the year.

Great. Thank you.

Thank you. Our last question comes from Jonathan Komp with Baird. Please proceed with your question.

Yeah. Hi. Thanks, everyone. A couple of follow-ups, first, just when you look at the third quarter, is there an easy way to just boil down the revenue and the overall profit or margin impact from the disruptions?

Yeah, there's not an easy way. I mean, I think, said another way, I mean, I think that we obviously, the top-line is from the consensus, and so, again, we were not quite as efficient as we would have liked to have been. But that being said, I don't think we would have been terribly off. The other thing we haven't spoken about that probably negatively impacted the margins a little bit was, we spoke that the distribution center issues that we had disproportionately impacted the Boston Group brands, particularly the Muck brand. The Muck brand has a strong margin, in the product that we got out was more of our value product, which carries a lower margin during this move and transition. So that negatively - that was a challenge on or a headwind on our margins in the third quarter as well. Jason, I don't know if you have anything out there.

No, you got it.

Okay. And then a follow-up on the comment of October and the pairs. I think it was pairs processed at double the level processed in August. Can you just maybe comment October, the amount you've processed or shipped relative to where it needs to be on an ideal state? And when you expect that you should be able to get to where you need to be?

Yeah, I would say if we had - if we were hitting where we wanted to do, we would have done about 10% more than what we did in October.

But I just want to add, like, if you look at it by week, which we are looking at it by week, and we're looking at by day, but we really - so it's gotten better, Jonathan. Like if you look at even the last week in September, we got better in the first week in October and we've gotten better in the second and third and fourth. So, if you look at the whole month that like Tom said, we maybe would have liked to see about 10% more. But it's getting better every week.

And Jonathan to that point too, as we've continued to integrate them into our systems we have more flexibility today than we did in the third quarter. We're shuffling orders around and leveraging our supply chain partners to divert containers or even break down containers at port and ship them out. So we're working very diligently to find other solutions to get the product to our retail partners.

Okay, that's really helpful. And then just a follow-up on the full year comment around revenue, which is helpful. Tom you didn't mention margin or earnings. Is there any way to comment on what we should expect? And specifically, I'm wondering if you still think you can have a double-digit operating margin for this year or any additional color there?

Yeah, so, as it relates to margins, we have previously guided to 39%. I would say, we're continuing to experience some of the supply chain costs, with freights and things like that. And also some labor constraints and incentives in our U.S. manufacturing facilities. And so we probably bring that down a little bit, probably closer to the 38% range for the full year, down from 39%. As it relates to operating income, I think we're not going to give any real further guidance on this. I think there's still a lot of moving parts with the efficiencies. While we've doubled the capacity of their distribution center, and we're still not doing nearly as efficiently as we would like. And so we're not going to give you further guidance on operating income.

Yeah, makes sense. Last one for me, just as you think about the Boston Group into next year. I don't know what the right baseline is, do you sort of assume you recapture anything you lost this year? And then I know at one point, you expected to grow in 2021 by 20% for that group. So just any context on such a big variable, as we think about modeling for next year, how we should actually think about the Boston Group opportunity?

This is a great question, Jonathan. And we are obviously at the bottom of - it's obvious, but I assume everybody's in the middle of budget season. And this is a really big question that we are trying to weed through as well. The question is, have we disrupted any dealers to where they may buy less from us next year? We still think and know the brands are strong. And so we believe that we're going to fall into Q1, and it's not struggle, but it's not going to be perfect yet from a DC standpoint. 20% probably a little aggressive next year. But we still think there's great opportunity here. And we're trying to navigate that question as well as we go into next year.

Yeah, I think, as we think about this, we know that there's a ton of demand for the brands, and really, that kind of spans Rocky, Georgia, Durango, Muck, and XTRATUF. And so we've got some visibility into bookings for 2022. We're seeing significant increases in our bookings. We think there's a couple of things driving that. If we think one, we might see some of the retailers with the supply chain issues, taking a more aggressive outlook and making sure they get their orders in time. But also, we think that this speaks volumes to the demand we're seeing for our brands. And so as we think about our ability to execute from a distribution standpoint, again, we think we'll continue to make progress throughout the fourth quarter, and in Q1, and then hopefully, as we get into Q2, Q3, and very importantly, Q3 and Q4 of next year, we'll be able to handle the seasonality and the influx in the business that we see. Again, and more importantly, as we integrate all the orders for next year into our system, we will have a lot more flexibility, we'll probably do significantly greater amount of direct fulfillment orders. But the demand is there and we've proven that we can get the inventory to us. So the key here is just getting it out the door in time. And I think that the whole environment right now with everybody struggling to get inventory, I think we're not standing out quite as horrendously as we probably feel internally about this, because, everybody's out of stock on inventory right now. So, we don't believe we're going to lose a lot of shelf space, just given this whole global supply chain crisis and how it's impacting everybody in our industry.

Understood. Appreciate all the color and best of luck with the continued progress here.

Thanks, Jonathan.

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