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Weyco Reports Second Quarter Sales And Earnings

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Weyco Reports Second Quarter Sales And Earnings

PR Newswire

MILWAUKEE, Aug. 7, 2018 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ:WEYS) (the "Company") today announced financial results for the quarter ended June 30, 2018.

Net sales for the second quarter of 2018 were $60.9 million, up 6% compared to second quarter 2017 net sales of $57.5 million. Earnings from operations were $1.9 million in both the second quarters of 2018 and 2017. Net earnings attributable to the Company rose 29% to $1.6 million in the second quarter of 2018, from $1.3 million in last year's second quarter. Net earnings were positively impacted by the lower U.S. federal tax rate of 21% effective January 1, 2018, compared to 35% in 2017, which resulted from the passing of the Tax Cuts and Jobs Act. Diluted earnings per share were $0.15 per share in the second quarter of 2018 and $0.12 per share in the second quarter of 2017.  

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $45.6 million for the second quarter of 2018, up 8% compared to $42.3 million in the second quarter of 2017.  Within the wholesale segment, net sales of the Florsheim brand were up 30% for the quarter, driven by strong new product sales in the national shoe chain and department store trade channels.  Net sales of the Nunn Bush and BOGS brands were up 4% and 6%, respectively, for the quarter. Stacy Adams sales were down 2% for the quarter. Licensing revenues were $472,000 in the second quarter of 2018, and $591,000 in last year's second quarter.

Gross earnings for the North American wholesale segment were 33.3% of net sales in the second quarter of 2018, compared to 31.3% of net sales in last year's second quarter. Earnings from operations for the wholesale segment rose 35% to $1.7 million in the second quarter of 2018, from $1.3 million in last year's second quarter, mainly due to higher sales and gross margins.

Net sales in the North American retail segment, which include sales from the Company's Florsheim retail stores and its internet business in the United States, were $4.6 million in the second quarter of 2018, down 3% compared to $4.8 million in the second quarter of 2017.  Same store sales (which include U.S. internet sales) were up 2% for the quarter due to increased sales on the Company's websites.  Retail earnings from operations increased to $222,000 this quarter, from $184,000 in last year's second quarter, mainly due to the benefit of closing unprofitable stores since last year.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $10.6 million in the second quarter of 2018, up 2% compared to $10.4 million in the second quarter of 2017. This increase was due to higher net sales at Florsheim Europe. Florsheim Australia's net sales were down 2% for the quarter, with lower sales in both its retail and wholesale businesses. Collectively, Florsheim Australia and Florsheim Europe had operating losses of $23,000 in the second quarter of 2018, compared to operating earnings of $407,000 in the second quarter of 2017. The decline between years was mainly due to lower operating earnings in Florsheim Australia's wholesale and retail businesses.    

"Our growth for the quarter came from our North American wholesale segment, led by our Florsheim brand," stated Thomas W. Florsheim, Jr., the Company's Chairman and CEO. "At the same time, our overseas businesses were challenged by the tepid retail environment in their markets.  Overall, we had a solid quarter, but we continue to work on the soft spots in our business and are excited to build upon our positive momentum in the second half of the year."

On July 31, 2018, the minority interest shareholder of Florsheim Australia provided notice that it will tender its shares, representing 45% equity in Florsheim Australia, to the Company, in accordance with the Shareholders Agreement dated January 23, 2009. Accordingly, the Company will purchase the minority interest of Florsheim Australia for $3.8 million on August 30, 2018.

On August 7, 2018, the Company's Board of Directors declared a cash dividend of $0.23 per share to all shareholders of record on August 29, 2018, payable September 28, 2018. 

Conference Call Details:

Weyco Group will host a conference call on August 8, 2018, at 11:00 a.m. Eastern Time to discuss the second 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=USfXFDlNcWzMlw. 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/gg3cpgib. 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 June 30, 


Six Months Ended June 30, 



2018


2017


2018


2017



(In thousands, except per share amounts)










Net sales

$ 60,888


$ 57,453


$ 130,414


$ 126,573

Cost of sales

37,182


35,363


80,083


79,255

Gross earnings

23,706


22,090


50,331


47,318










Selling and administrative expenses

21,759


20,200


44,817


41,969

Earnings from operations

1,947


1,890


5,514


5,349










Interest income 

254


200


487


379

Interest expense

-


-


-


(7)

Other expense, net

(176)


(55)


(219)


(190)










Earnings before provision for income taxes

2,025


2,035


5,782


5,531










Provision for income taxes

502


732


1,443


2,113










Net earnings

1,523


1,303


4,339


3,418










Net (loss) earnings attributable to noncontrolling interest

(103)


46


(274)


(56)










Net earnings attributable to Weyco Group, Inc.

$   1,626


$   1,257


$      4,613


$      3,474










Weighted average shares outstanding









Basic

10,214


10,305


10,194


10,370


Diluted

10,505


10,368


10,433


10,433










Earnings per share









Basic

$      0.16


$      0.12


$        0.45


$        0.34


Diluted

$      0.15


$      0.12


$        0.44


$        0.33










Cash dividends declared (per share)

$      0.23


$      0.22


$        0.45


$        0.43



















Comprehensive income

$       650


$   1,924


$      3,465


$      4,799

Comprehensive (loss) income attributable to noncontrolling interest

(383)


80


(588)


246

Comprehensive income attributable to Weyco Group, Inc.

$   1,033


$   1,844


$      4,053


$      4,553

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)










June 30,


December 31,


2018


2017


(Dollars in thousands)

ASSETS:

Cash and cash equivalents

$   23,998


$          23,453

Marketable securities, at amortized cost

8,781


5,970

Accounts receivable, net

37,879


49,451

Income tax receivable

1,901


669

Inventories

56,530


60,270

Prepaid expenses and other current assets

3,413


5,770

     Total current assets

132,502


145,583





Marketable securities, at amortized cost

17,421


17,669

Deferred income tax benefits

746


750

Property, plant and equipment, net

30,030


31,643

Goodwill

11,112


11,112

Trademarks

32,978


32,978

Other assets

23,019


23,097

     Total assets

$ 247,808


$        262,832





LIABILITIES AND EQUITY:




Accounts payable

$     5,878


$            8,905

Dividend payable

-


2,228

Accrued liabilities

10,520


14,031

     Total current liabilities

16,398


25,164





Deferred income tax liabilities 

2,990


2,069

Long-term pension liability

24,592


27,766

Other long-term liabilities

1,792


2,174

     Total liabilities

45,772


57,173





Common stock

10,160


10,162

Capital in excess of par value

59,928


55,884

Reinvested earnings

143,921


150,350

Accumulated other comprehensive loss

(18,419)


(17,859)

     Total Weyco Group, Inc. equity

195,590


198,537

Noncontrolling interest

6,446


7,122

     Total equity

202,036


205,659

     Total liabilities and equity

$ 247,808


$        262,832

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)











Six Months Ended June 30,




2018


2017




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$   4,339


$                    3,418


Adjustments to reconcile net earnings to net cash provided by operating activities - 






Depreciation

1,905


1,995



Amortization

171


186



Bad debt expense

160


291



Deferred income taxes

841


1,434



Net foreign currency transaction losses (gains)   

105


(15)



Stock-based compensation

805


779



Pension contribution

(3,000)


(4,000)



Pension expense

426


497



Increase in cash surrender value of life insurance

(115)


(115)


Changes in operating assets and liabilities - 






Accounts receivable

11,464


13,179



Inventories

3,714


9,041



Prepaid expenses and other assets

2,527


2,831



Accounts payable

(3,008)


(6,927)



Accrued liabilities and other

(5,213)


241



Accrued income taxes

(1,111)


(2,092)



    Net cash provided by operating activities

14,010


20,743







CASH FLOWS FROM INVESTING ACTIVITIES:





Purchases of marketable securities

(5,961)


(7,433)


Proceeds from maturities of marketable securities

3,375


3,015


Life insurance premiums paid

(155)


(155)


Purchases of property, plant and equipment

(491)


(772)



     Net cash used for investing activities

(3,232)


(5,345)







CASH FLOWS FROM FINANCING ACTIVITIES:





Cash dividends paid

(6,836)


(6,643)


Cash dividends paid to noncontrolling interest of subsidiary

(88)


(204)


Shares purchased and retired

(6,589)


(6,843)


Net proceeds from stock options exercised

4,048


438


Taxes paid related to the net share settlement of equity awards

(611)


-


Proceeds from bank borrowings

-


6,816


Repayments of bank borrowings

-


(11,084)



     Net cash used for financing activities

(10,076)


(17,520)








Effect of exchange rate changes on cash and cash equivalents

(157)


266








Net increase (decrease) in cash and cash equivalents

$     545


$                   (1,856)







CASH AND CASH EQUIVALENTS at beginning of period

23,453


13,710







CASH AND CASH EQUIVALENTS at end of period

$ 23,998


$                  11,854







SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$   1,927


$                    2,805


Interest paid

$           -


$                           7

 

Cision View original content:http://www.prnewswire.com/news-releases/weyco-reports-second-quarter-sales-and-earnings-300693466.html

SOURCE Weyco Group, Inc.

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