Weyco Reports Third Quarter Sales And Earnings
MILWAUKEE, Nov. 6, 2018 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ: WEYS) (the "Company") today announced financial results for the quarter ended September 30, 2018.
Net sales for the third quarter of 2018 were $78.4 million, an increase of 2% compared to third quarter 2017 net sales of $76.9 million. Earnings from operations increased 3% to $8.0 million in the third quarter of 2018, from $7.8 million in the third quarter of 2017. Net earnings attributable to the Company rose 27% to $6.3 million in the third quarter of 2018, up from $4.9 million in last year's third quarter. Net earnings were positively impacted by the lower U.S. federal tax rate this year. Diluted earnings per share were $0.60 per share in the third quarter of 2018 and $0.48 per share in the third quarter of 2017.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $63.2 million in the third quarter of 2018, up 4% compared to $60.7 million in the third quarter of 2017. Within the wholesale segment, net sales of the Stacy Adams brand were up 17% for the quarter, primarily due to higher sales to department stores and national shoe chains. Florsheim net sales were up 8%, due to sales volume increases across the majority of distribution channels. BOGS third quarter net sales were down 5% for the quarter, mainly with outdoor and online retailers. Net sales of the Nunn Bush brand were flat for the quarter. Licensing revenues were approximately $530,000 in both the third quarters of 2018 and 2017.
Gross earnings for the North American wholesale segment increased to 34.4% of net sales in the third quarter of 2018, from 33.9% of net sales in last year's third quarter. Earnings from operations for the wholesale segment were $7.6 million in the third quarter of 2018, up 3% compared to $7.4 million in the same period last year. The increase was primarily due to higher sales and gross margins.
Net sales in the North American retail segment, which includes sales from the Company's Florsheim retail stores and its internet businesses in the United States, were $4.9 million in the third quarter of 2018, up 15% compared to $4.3 million in the third quarter of 2017. Same store sales (which includes U.S. internet sales) were up 20% for the quarter, due mainly to increased sales on the Company's websites. Driven by higher online sales, retail earnings from operations rose to $428,000 in the third quarter of 2018, from $17,000 in the third quarter of 2017.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.3 million in the third quarter of 2018, down 14% compared to $11.9 million in the third quarter of 2017. The decrease was primarily due to a 16% reduction in net sales at Florsheim Australia. In local currency, Florsheim Australia's net sales were down 9% for the quarter, with sales down in both its wholesale and retail businesses. The weaker Australian dollar relative to the U.S. dollar also contributed to the decrease in Florsheim Australia's net sales this year. Earnings from operations of Florsheim Australia and Florsheim Europe were $8,000 in the third quarter of 2018, compared to $369,000 in the same period last year. The decline between years was primarily due to lower sales at Florsheim Australia.
During the third quarter, David Venner, Director of Seraneuse Pty Ltd, the minority interest shareholder of Florsheim Australia Pty Ltd ("Florsheim Australia"), provided notice and tendered to the Company his shares, which represented a 45% equity interest in Florsheim Australia, in accordance with the Shareholders Agreement dated January 23, 2009. The Shareholders Agreement allowed him to tender the shares, at his discretion, anytime on or after January 23, 2014. Accordingly, the Company purchased the minority interest in Florsheim Australia for $3.7 million on August 30, 2018, and the Company now owns 100% of Florsheim Australia.
"We are pleased with the results of our North American businesses this quarter," stated Thomas W. Florsheim, Jr., the Company's Chairman and CEO. "Not only did our wholesale segment post gains in both sales and operating earnings, but our websites had a particularly strong quarter, boosting our overall operating results for the period. Overseas our businesses continue to struggle in a tepid retail environment. As we look ahead to the fourth quarter, our focus continues to be on growing our core brands, as well as improving the profitability of our international businesses."
On November 6, 2018 the Company's Board of Directors declared a cash dividend of $0.23 per share to all shareholders of record on December 3, 2018, payable on January 2, 2019.
Conference Call Details:
Weyco Group will host a conference call on November 7, 2018 at 11:00 a.m. Eastern Time to discuss the third quarter financial results in more detail. To participate in the call, you will first need to pre-register online. Pre-registration takes only a few minutes and you may pre-register at any time, including up to and after the call start time. To pre-register, please go to: https://www.yourconferencecenter.com/confcenter/PinCode/Pin_Code.aspx?100374&o=USQKcavifznPuQ. The pre-registration process will provide the conference call phone number and a passcode required to enter 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: https://edge.media-server.com/m6/p/a2ejvfue. The conference call will also be available in 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, and Rafters. 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, |
|||||||
2018 |
2017 |
2018 |
2017 |
|||||
(In thousands, except per share amounts) |
||||||||
Net sales |
$ 78,375 |
$ 76,906 |
$ 208,789 |
$ 203,479 |
||||
Cost of sales |
47,984 |
47,438 |
128,067 |
126,693 |
||||
Gross earnings |
30,391 |
29,468 |
80,722 |
76,786 |
||||
Selling and administrative expenses |
22,344 |
21,666 |
67,161 |
63,635 |
||||
Earnings from operations |
8,047 |
7,802 |
13,561 |
13,151 |
||||
Interest income |
252 |
193 |
739 |
572 |
||||
Interest expense |
(10) |
- |
(10) |
(7) |
||||
Other expense, net |
(195) |
(53) |
(414) |
(243) |
||||
Earnings before provision for income taxes |
8,094 |
7,942 |
13,876 |
13,473 |
||||
Provision for income taxes |
1,942 |
3,022 |
3,385 |
5,135 |
||||
Net earnings |
6,152 |
4,920 |
10,491 |
8,338 |
||||
Net loss attributable to noncontrolling interest |
(124) |
(14) |
(398) |
(70) |
||||
Net earnings attributable to Weyco Group, Inc. |
$ 6,276 |
$ 4,934 |
$ 10,889 |
$ 8,408 |
||||
Weighted average shares outstanding |
||||||||
Basic |
10,114 |
10,160 |
10,167 |
10,299 |
||||
Diluted |
10,391 |
10,218 |
10,419 |
10,360 |
||||
Earnings per share |
||||||||
Basic |
$ 0.62 |
$ 0.49 |
$ 1.07 |
$ 0.82 |
||||
Diluted |
$ 0.60 |
$ 0.48 |
$ 1.05 |
$ 0.81 |
||||
Cash dividends declared (per share) |
$ 0.23 |
$ 0.22 |
$ 0.68 |
$ 0.65 |
||||
Comprehensive income |
$ 6,086 |
$ 5,452 |
$ 9,551 |
$ 10,251 |
||||
Comprehensive (loss) income attributable to noncontrolling interest |
(282) |
25 |
(870) |
271 |
||||
Comprehensive income attributable to Weyco Group, Inc. |
$ 6,368 |
$ 5,427 |
$ 10,421 |
$ 9,980 |
||||
WEYCO GROUP, INC. AND SUBSIDIARIES |
|||
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) |
|||
September 30, |
December 31, |
||
2018 |
2017 |
||
(Dollars in thousands) |
|||
ASSETS: |
|||
Cash and cash equivalents |
$ 15,750 |
$ 23,453 |
|
Marketable securities, at amortized cost |
5,098 |
5,970 |
|
Accounts receivable, net |
56,797 |
49,451 |
|
Income tax receivable |
533 |
669 |
|
Inventories |
60,069 |
60,270 |
|
Prepaid expenses and other current assets |
3,085 |
5,770 |
|
Total current assets |
141,332 |
145,583 |
|
Marketable securities, at amortized cost |
18,895 |
17,669 |
|
Deferred income tax benefits |
786 |
750 |
|
Property, plant and equipment, net |
29,393 |
31,643 |
|
Goodwill |
11,112 |
11,112 |
|
Trademarks |
32,978 |
32,978 |
|
Other assets |
23,192 |
23,097 |
|
Total assets |
$ 257,688 |
$ 262,832 |
|
LIABILITIES AND EQUITY: |
|||
Short-term borrowings |
$ 8,048 |
$ - |
|
Accounts payable |
5,956 |
8,905 |
|
Dividend payable |
- |
2,228 |
|
Accrued liabilities |
11,465 |
14,031 |
|
Total current liabilities |
25,469 |
25,164 |
|
Deferred income tax liabilities |
3,587 |
2,069 |
|
Long-term pension liability |
24,422 |
27,766 |
|
Other long-term liabilities |
1,634 |
2,174 |
|
Total liabilities |
55,112 |
57,173 |
|
Common stock |
10,202 |
10,162 |
|
Capital in excess of par value |
63,938 |
55,884 |
|
Reinvested earnings |
147,874 |
150,350 |
|
Accumulated other comprehensive loss |
(19,438) |
(17,859) |
|
Total Weyco Group, Inc. equity |
202,576 |
198,537 |
|
Noncontrolling interest |
- |
7,122 |
|
Total equity |
202,576 |
205,659 |
|
Total liabilities and equity |
$ 257,688 |
$ 262,832 |
|
WEYCO GROUP, INC. AND SUBSIDIARIES |
|||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) |
|||||
Nine Months Ended September 30, |
|||||
2018 |
2017 |
||||
(Dollars in thousands) |
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||
Net earnings |
$ 10,491 |
$ 8,338 |
|||
Adjustments to reconcile net earnings to net cash provided by operating activities - |
|||||
Depreciation |
2,842 |
2,971 |
|||
Amortization |
238 |
265 |
|||
Bad debt expense |
190 |
350 |
|||
Deferred income taxes |
1,353 |
2,192 |
|||
Net foreign currency transaction losses (gains) |
332 |
(61) |
|||
Stock-based compensation |
1,149 |
1,174 |
|||
Pension contribution |
(3,000) |
(4,000) |
|||
Pension expense |
522 |
746 |
|||
Increase in cash surrender value of life insurance |
(250) |
(250) |
|||
Changes in operating assets and liabilities - |
|||||
Accounts receivable |
(7,557) |
(5,703) |
|||
Inventories |
180 |
12,195 |
|||
Prepaid expenses and other assets |
2,756 |
3,167 |
|||
Accounts payable |
(2,928) |
(6,838) |
|||
Accrued liabilities and other |
(4,749) |
1,849 |
|||
Accrued income taxes |
278 |
22 |
|||
Net cash provided by operating activities |
1,847 |
16,417 |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||
Purchases of marketable securities |
(7,819) |
(14,719) |
|||
Proceeds from maturities of marketable securities |
7,450 |
10,710 |
|||
Life insurance premiums paid |
(155) |
(155) |
|||
Purchases of property, plant and equipment |
(876) |
(1,406) |
|||
Net cash used for investing activities |
(1,400) |
(5,570) |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||
Cash dividends paid |
(9,213) |
(8,877) |
|||
Cash dividends paid to noncontrolling interest of subsidiary |
(88) |
(204) |
|||
Payment to acquire noncontrolling interest of subsidiary |
(3,740) |
- |
|||
Shares purchased and retired |
(6,589) |
(11,621) |
|||
Proceeds from stock options exercised |
4,308 |
2,013 |
|||
Taxes paid related to the net share settlement of equity awards |
(699) |
(51) |
|||
Proceeds from bank borrowings |
20,309 |
20,651 |
|||
Repayments of bank borrowings |
(12,261) |
(20,147) |
|||
Net cash used for financing activities |
(7,973) |
(18,236) |
|||
Effect of exchange rate changes on cash and cash equivalents |
(177) |
383 |
|||
Net decrease in cash and cash equivalents |
$ (7,703) |
$ (7,006) |
|||
CASH AND CASH EQUIVALENTS at beginning of period |
23,453 |
13,710 |
|||
CASH AND CASH EQUIVALENTS at end of period |
$ 15,750 |
$ 6,704 |
|||
SUPPLEMENTAL CASH FLOW INFORMATION: |
|||||
Income taxes paid, net of refunds |
$ 1,915 |
$ 2,829 |
|||
Interest paid |
$ 10 |
$ 7 |
|||
SOURCE Weyco Group, Inc.
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