Weyco Reports Second Quarter Sales And Earnings
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 cashprovided 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 | |||
View original content:http://www.prnewswire.com/news-releases/weyco-reports-second-quarter-sales-and-earnings-300693466.html
SOURCE Weyco Group, Inc.
