Weyco Reports Third Quarter Sales And Earnings
MILWAUKEE, Nov. 2, 2015 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ:WEYS) (the "Company") today announced financial results for the quarter ended September 30, 2015.
The Company achieved record third quarter net sales of $91.2 million in 2015. This represents a 4% increase over third quarter 2014 net sales of $87.4 million. Earnings from operations were $9.1 million in the third quarter of 2015, up 1% as compared to $9.0 million in the third quarter of 2014. Net earnings attributable to the Company and diluted earnings per share were flat at $5.5 million and $0.51 per share, respectively, in the third quarters of 2015 and 2014.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $74.6 million for the third quarter of 2015, up 10% as compared to $68.0 million in the third quarter of 2014. Within the wholesale segment, net sales of our BOGS brand were up 20% for the quarter, due to strong sales of its core products as well as positive acceptance of its new leather footwear. Net sales of our Stacy Adams brand were up 10% for the quarter, driven by strong new product sales. Florsheim and Nunn Bush net sales were up 4% and 1%, respectively, for the quarter. Wholesale gross earnings were 31.4% of net sales in the third quarter of 2015, as compared to 31.7% in last year's third quarter. Gross margins in the U.S. increased from 30.7% last year to 31.6% this year, however, this increase was offset by lower gross margins in Canada. Gross margins in Canada continue to be affected by the weaker Canadian dollar, however, gains recorded on foreign exchange contracts partially offset the impact of the weaker Canadian dollar this year. Driven by higher sales volumes, wholesale earnings from operations rose 10% to $8.2 million in the third quarter of 2015, from $7.4 million in the same period last year.
The North American retail segment represents a small portion of the Company's overall business, with retail segment net sales comprising only 5% of total net sales. Net sales of this segment, which include sales from the Company's Florsheim retail stores and its internet business in the U.S., were $4.8 million in the third quarter of 2015, down 11% as compared to $5.4 million in 2014. The decrease was due to three fewer domestic retail stores operating this quarter compared to last year's third quarter, as well as a 5% decrease in same store sales. Retail earnings from operations were $402,000 this quarter, down from $638,000 in last year's third quarter, due to lower net sales at the Company's brick and mortar stores.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $11.9 million in the third quarter of 2015, down 15% as compared to $14.0 million in 2014. This decrease was primarily due to lower net sales at Florsheim Australia, caused mainly by the translation of the weaker Australian currency into U.S. dollars. In local currency, Florsheim Australia's net sales were up 10% for the quarter. Earnings from operations at Florsheim Australia and Florsheim Europe were $578,000 in the third quarter of 2015 compared to $936,000 in the same period last year. This decrease was primarily due to lower gross margins at Florsheim Australia. Gross margins in Australia were negatively impacted by the weaker Australian dollar this quarter, as Australia purchases its inventory in U.S. dollars.
"We are excited to have achieved record third quarter sales," stated Thomas W. Florsheim, Jr., the Company's Chairman and CEO. "Our sales increase was driven by our eighth consecutive quarter of double-digit sales growth for our BOGS brand, as well as our fifth consecutive quarter of double-digit sales growth for our Stacy Adams brand. We feel fortunate that the strength of our U.S. businesses offset the significant headwinds caused by the appreciation of the U.S. dollar against the Canadian and Australian currencies."
On November 2, 2015, the Company's Board of Directors declared a cash dividend of $0.20 per share to all shareholders of record on December 9, 2015, payable January 4, 2016.
Conference Call Details:
Weyco Group will host a conference call on November 3, 2015, at 11:00 a.m. Eastern Time to discuss the third quarter financial results in more detail. To participate in the call, please dial 888-713-4205 or 617-213-4862, referencing passcode 22724374, five minutes before the start of the call. A replay will be available for one year beginning about two hours after the completion of the call at the following webcast link: http://edge.media-server.com/m/p/pzaxkas2. Alternatively, the conference call will be available by visiting the investor relations section of Weyco Group's website at www.weycogroup.com.
About Weyco Group:
Weyco Group, Inc. designs and markets quality and innovative footwear for men, women and children under a portfolio of well-recognized brand names including: Florsheim, Nunn Bush, Stacy Adams, BOGS, Rafters and Umi. The Company's products can be found in leading footwear, department, and specialty stores worldwide. Weyco Group also operates Florsheim concept stores in the United States and Australia, as well as in a variety of international markets.
Forward-Looking Statements:
This press release contains certain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Various factors could cause the results of Weyco Group to be materially different from any future results expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the Company's ability to: (i) successfully market and sell its products in a highly competitive industry and in view of changing consumer trends, consumer acceptance of products and other factors affecting retail market conditions; (ii) procure its products from independent manufacturers; and (iii) other factors, including those detailed from time to time in Weyco Group's filings made with the SEC. Weyco Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
| WEYCO GROUP, INC. AND SUBSIDIARIES |
||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) |
||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| (In thousands, except per share amounts) |
||||||||
| Net sales |
$ 91,227 |
$ 87,425 |
$ 233,213 |
$ 225,217 |
||||
| Cost of sales |
58,617 |
55,004 |
147,443 |
141,215 |
||||
| Gross earnings |
32,610 |
32,421 |
85,770 |
84,002 |
||||
| Selling and administrative expenses |
23,474 |
23,402 |
67,516 |
66,726 |
||||
| Earnings from operations |
9,136 |
9,019 |
18,254 |
17,276 |
||||
| Interest income |
221 |
297 |
717 |
892 |
||||
| Interest expense |
(67) |
(52) |
(97) |
(123) |
||||
| Other expense, net |
(524) |
(221) |
(1,150) |
(261) |
||||
| Earnings before provision for income taxes |
8,766 |
9,043 |
17,724 |
17,784 |
||||
| Provision for income taxes |
3,389 |
3,498 |
6,670 |
6,488 |
||||
| Net earnings |
5,377 |
5,545 |
11,054 |
11,296 |
||||
| Net (losses) earnings attributable to noncontrolling interest |
(149) |
27 |
(145) |
366 |
||||
| Net earnings attributable to Weyco Group, Inc. |
$ 5,526 |
$ 5,518 |
$ 11,199 |
$ 10,930 |
||||
| Weighted average shares outstanding |
||||||||
| Basic |
10,793 |
10,775 |
10,788 |
10,810 |
||||
| Diluted |
10,884 |
10,870 |
10,881 |
10,902 |
||||
| Earnings per share |
||||||||
| Basic |
$ 0.51 |
$ 0.51 |
$ 1.04 |
$ 1.01 |
||||
| Diluted |
$ 0.51 |
$ 0.51 |
$ 1.03 |
$ 1.00 |
||||
| Cash dividends declared (per share) |
$ 0.20 |
$ 0.19 |
$ 0.59 |
$ 0.56 |
||||
| Comprehensive income |
$ 4,040 |
$ 4,226 |
$ 8,760 |
$ 10,823 |
||||
| Comprehensive (loss) income attributable to noncontrolling interest |
(562) |
(342) |
(846) |
235 |
||||
| Comprehensive income attributable to Weyco Group, Inc. |
$ 4,602 |
$ 4,568 |
$ 9,606 |
$ 10,588 |
||||
| WEYCO GROUP, INC. AND SUBSIDIARIES |
|||
| CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) |
|||
| September 30, |
December 31, |
||
| 2015 |
2014 |
||
| (Dollars in thousands) |
|||
| ASSETS: |
|||
| Cash and cash equivalents |
$ 13,900 |
$ 12,499 |
|
| Marketable securities, at amortized cost |
5,739 |
5,914 |
|
| Accounts receivable, net |
67,098 |
55,100 |
|
| Inventories |
92,566 |
69,015 |
|
| Prepaid expenses and other current assets |
4,151 |
7,521 |
|
| Total current assets |
183,454 |
150,049 |
|
| Marketable securities, at amortized cost |
20,630 |
24,540 |
|
| Deferred income tax benefits |
1,116 |
1,999 |
|
| Property, plant and equipment, net |
31,661 |
33,694 |
|
| Goodwill |
11,112 |
11,112 |
|
| Trademarks |
34,748 |
34,748 |
|
| Other assets |
20,726 |
21,304 |
|
| Total assets |
$ 303,447 |
$ 277,446 |
|
| LIABILITIES AND EQUITY: |
|||
| Short-term borrowings |
$ 41,974 |
$ 5,405 |
|
| Accounts payable |
8,030 |
15,657 |
|
| Dividend payable |
- |
2,045 |
|
| Accrued liabilities |
16,417 |
12,752 |
|
| Accrued income tax payable |
729 |
151 |
|
| Deferred income tax liabilities |
1,864 |
1,747 |
|
| Total current liabilities |
69,014 |
37,757 |
|
| Long-term pension liability |
31,959 |
33,379 |
|
| Other long-term liabilities |
2,656 |
8,356 |
|
| Equity: |
|||
| Common stock |
10,809 |
10,821 |
|
| Capital in excess of par value |
42,075 |
37,966 |
|
| Reinvested earnings |
160,385 |
160,179 |
|
| Accumulated other comprehensive loss |
(19,623) |
(18,030) |
|
| Total Weyco Group, Inc. equity |
193,646 |
190,936 |
|
| Noncontrolling interest |
6,172 |
7,018 |
|
| Total equity |
199,818 |
197,954 |
|
| Total liabilities and equity |
$ 303,447 |
$ 277,446 |
|
| WEYCO GROUP, INC. AND SUBSIDIARIES |
|||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) |
|||||
| Nine Months Ended September 30, |
|||||
| 2015 |
2014 |
||||
| (Dollars in thousands) |
|||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||
| Net earnings |
$ 11,054 |
$ 11,296 |
|||
| Adjustments to reconcile net earnings to net cash |
|||||
| used for operating activities - |
|||||
| Depreciation |
2,700 |
2,775 |
|||
| Amortization |
334 |
263 |
|||
| Bad debt expense |
190 |
195 |
|||
| Deferred income taxes |
456 |
(47) |
|||
| Net foreign currency transaction losses |
783 |
174 |
|||
| Stock-based compensation |
1,112 |
1,046 |
|||
| Pension contributions |
(2,633) |
(1,300) |
|||
| Pension expense |
2,811 |
1,659 |
|||
| Increase in cash surrender value of life insurance |
(250) |
(250) |
|||
| Changes in operating assets and liabilities - |
|||||
| Accounts receivable |
(12,223) |
(14,702) |
|||
| Inventories |
(23,844) |
(1,039) |
|||
| Prepaid expenses and other assets |
4,122 |
1,556 |
|||
| Accounts payable |
(7,584) |
(5,594) |
|||
| Accrued liabilities and other |
(4,807) |
(418) |
|||
| Accrued income taxes |
553 |
1,010 |
|||
| Net cash used for operating activities |
(27,226) |
(3,376) |
|||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||
| Purchases of marketable securities |
(2,300) |
(7,427) |
|||
| Proceeds from maturities of marketable securities |
6,305 |
7,001 |
|||
| Life insurance premiums paid |
(155) |
(155) |
|||
| Purchases of property, plant and equipment |
(1,457) |
(1,908) |
|||
| Net cash provided by (used for) investing activities |
2,393 |
(2,489) |
|||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||
| Cash dividends paid |
(8,414) |
(7,999) |
|||
| Shares purchased and retired |
(4,760) |
(3,996) |
|||
| Proceeds from stock options exercised |
2,696 |
1,226 |
|||
| Proceeds from bank borrowings |
127,253 |
70,757 |
|||
| Repayments of bank borrowings |
(90,684) |
(58,470) |
|||
| Income tax benefits from stock-based compensation |
463 |
85 |
|||
| Net cash provided by financing activities |
26,554 |
1,603 |
|||
| Effect of exchange rate changes on cash and cash equivalents |
(320) |
21 |
|||
| Net increase (decrease) in cash and cash equivalents |
$ 1,401 |
$ (4,241) |
|||
| CASH AND CASH EQUIVALENTS at beginning of period |
12,499 |
15,969 |
|||
| CASH AND CASH EQUIVALENTS at end of period |
$ 13,900 |
$ 11,728 |
|||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
|||||
| Income taxes paid, net of refunds |
$ 5,155 |
$ 5,501 |
|||
| Interest paid |
$ 97 |
$ 84 |
|||
SOURCE Weyco Group, Inc.
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