MILWAUKEE, Nov. 4, 2014 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ:WEYS) (the "Company") today announced financial results for the quarter ended September 30, 2014.
Net sales for the third quarter of 2014 were $87.4 million, an increase of 5% from 2013 net sales of $83.1 million. Earnings from operations increased 5% to $9.0 million in the third quarter of 2014, compared to $8.6 million in 2013. Net earnings attributable to the Company were $5.5 million in the third quarter of 2014, up 2% from $5.4 million in 2013. Diluted earnings per share increased to $0.51 per share in the third quarter of 2014, from $0.50 per share in the third quarter of 2013.
Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $68.0 million for the third quarter of 2014, up 5% as compared to $64.8 million in 2013. Within the wholesale segment, net sales of our BOGS brand increased by 37% for the quarter, driven by higher sales volumes across all major distribution channels. Stacy Adams net sales were up 10% for the quarter, with strong sales in the modern dress shoe category. Nunn Bush and Florsheim net sales were down 12% and 9%, respectively, for the quarter. The decline at Nunn Bush was primarily due to lower sales with department stores. Florsheim net sales were down due to lower sales volumes with department stores and independent retailers. Wholesale gross earnings were 31.7% of net sales in the third quarter of 2014, compared to 32.6% in the third quarter of 2013. The decrease in gross margins was driven by the impact of significantly lower margins in our Canadian business, caused by the weaker Canadian dollar relative to the U.S. dollar in the third quarter of 2014, as compared to last year's third quarter. Earnings from operations for the wholesale segment were $7.4 million in the third quarter of 2014, up 5% as compared to $7.1 million in the same period last year. This increase was primarily due to higher net sales.
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 $5.4 million in the third quarter of 2014, up 2% as compared to $5.2 million in 2013. Same store sales were up 6% for the quarter. There were two fewer domestic retail stores during the third quarter of 2014 than there were in last year's third quarter. Earnings from operations for the retail segment were $638,000 in the third quarter of 2014, up 25% as compared to $512,000 in 2013. This increase was due to the benefit of closing underperforming stores and improved performance at both brick and mortar stores and the Company's U.S. internet business.
Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $14.0 million in the third quarter of 2014, up 7% as compared to $13.1 million in 2013. The majority of other net sales were generated by Florsheim Australia. Florsheim Australia's net sales were up 9% for the quarter. This increase was due to higher sales in both its retail businesses, where sales were up 4% (same store sales up 1%), and its wholesale businesses, where sales were up 18%. Florsheim Australia's wholesale businesses were up this quarter, driven by a significant increase in the Asian market and a smaller increase in the Australian market. Earnings from operations of these businesses were $936,000 in the third quarter of 2014, down 6% as compared to $1.0 million in the same period last year. This decrease was primarily due to lower wholesale gross margins and higher retail selling and administrative expenses at Florsheim Australia.
"We are excited about the growth of our BOGS brand in both the U.S. and Canada, however, our legacy brands continue to face a tepid retail environment and challenges with a few key retailers," stated Thomas W. Florsheim, Jr. the Company's Chairman and CEO. "We feel the business with our legacy brands has now stabilized and we anticipate rounding out the year with another strong quarter for BOGS."
On November 3, 2014, the Company's Board of Directors declared a cash dividend of $0.19 per share to all shareholders of record on December 9, 2014, payable January 2, 2015.
Conference Call Details:
Weyco Group will host a conference call on November 5, 2014, at 11:00 a.m. Eastern Time to discuss the third quarter financial results in more detail. To participate in the call, please dial 888-713-4214 or 617-213-4866, referencing passcode 80494297, 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://www.media-server.com/m/p/6fzfq5qb. Alternatively, the conference call and replay 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) |
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| Three Months Ended September 30, |
| Nine Months Ended September 30, |
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| 2014 |
| 2013 |
| 2014 |
| 2013 |
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| (In thousands, except per share amounts) |
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Net sales | $ 87,425 |
| $ 83,108 |
| $ 225,217 |
| $ 221,739 |
Cost of sales | 55,004 |
| 51,529 |
| 141,215 |
| 137,763 |
Gross earnings | 32,421 |
| 31,579 |
| 84,002 |
| 83,976 |
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Selling and administrative expenses | 23,402 |
| 22,993 |
| 66,726 |
| 67,022 |
Earnings from operations | 9,019 |
| 8,586 |
| 17,276 |
| 16,954 |
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Interest income | 297 |
| 346 |
| 892 |
| 1,144 |
Interest expense | (52) |
| (75) |
| (123) |
| (314) |
Other expense, net | (221) |
| (123) |
| (261) |
| (750) |
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Earnings before provision for income taxes | 9,043 |
| 8,734 |
| 17,784 |
| 17,034 |
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Provision for income taxes | 3,498 |
| 3,133 |
| 6,488 |
| 6,043 |
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Net earnings | 5,545 |
| 5,601 |
| 11,296 |
| 10,991 |
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Net earnings attributable to noncontrolling interest | 27 |
| 209 |
| 366 |
| 194 |
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Net earnings attributable to Weyco Group, Inc. | $ 5,518 |
| $ 5,392 |
| $ 10,930 |
| $ 10,797 |
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Weighted average shares outstanding |
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| Basic | 10,775 |
| 10,786 |
| 10,810 |
| 10,770 |
| Diluted | 10,870 |
| 10,873 |
| 10,902 |
| 10,840 |
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Earnings per share |
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| Basic | $ 0.51 |
| $ 0.50 |
| $ 1.01 |
| $ 1.00 |
| Diluted | $ 0.51 |
| $ 0.50 |
| $ 1.00 |
| $ 1.00 |
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Cash dividends declared (per share) | $ 0.19 |
| $ 0.18 |
| $ 0.56 |
| $ 0.36 |
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Comprehensive income | $ 4,226 |
| $ 6,340 |
| $ 10,823 |
| $ 10,204 |
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Comprehensive (loss) income attributable to noncontrolling interest | (342) |
| 268 |
| 235 |
| (412) |
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Comprehensive income attributable to Weyco Group, Inc. | $ 4,568 |
| $ 6,072 |
| $ 10,588 |
| $ 10,616 |
WEYCO GROUP, INC. AND SUBSIDIARIES |
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) |
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| September 30, |
| December 31, |
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| 2014 |
| 2013 |
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| (Dollars in thousands) |
ASSETS: |
Cash and cash equivalents |
| $ 11,728 |
| $ 15,969 |
Marketable securities, at amortized cost |
| 4,119 |
| 5,196 |
Accounts receivable, net |
| 63,016 |
| 48,530 |
Accrued income tax receivable |
| 22 |
| 1,055 |
Inventories |
| 64,154 |
| 63,196 |
Prepaid expenses and other current assets |
| 4,834 |
| 6,136 |
Total current assets |
| 147,873 |
| 140,082 |
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Marketable securities, at amortized cost |
| 26,523 |
| 25,024 |
Property, plant and equipment, net |
| 34,062 |
| 35,112 |
Goodwill |
| 11,112 |
| 11,112 |
Trademarks |
| 34,748 |
| 34,748 |
Other assets |
| 21,340 |
| 21,455 |
Total assets |
| $ 275,658 |
| $ 267,533 |
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LIABILITIES AND EQUITY: |
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Short-term borrowings |
| $ 24,287 |
| $ 12,000 |
Accounts payable |
| 8,359 |
| 13,956 |
Dividend payable |
| - |
| 1,949 |
Accrued liabilities |
| 11,152 |
| 10,902 |
Deferred income tax liabilities |
| 1,171 |
| 849 |
Total current liabilities |
| 44,969 |
| 39,656 |
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Deferred income tax liabilities |
| 1,834 |
| 1,993 |
Long-term pension liability |
| 21,468 |
| 21,901 |
Other long-term liabilities |
| 7,488 |
| 6,991 |
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Equity: |
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Common stock |
| 10,806 |
| 10,876 |
Capital in excess of par value |
| 34,003 |
| 31,729 |
Reinvested earnings |
| 157,989 |
| 156,983 |
Accumulated other comprehensive loss |
| (9,764) |
| (9,422) |
Total Weyco Group, Inc. equity |
| 193,034 |
| 190,166 |
Noncontrolling interest |
| 6,865 |
| 6,826 |
Total equity |
| 199,899 |
| 196,992 |
Total liabilities and equity |
| $ 275,658 |
| $ 267,533 |
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WEYCO GROUP, INC. AND SUBSIDIARIES |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) |
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| Nine Months Ended September 30, |
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| 2014 |
| 2013 |
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| (Dollars in thousands) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
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| Net earnings | $ 11,296 |
| $ 10,991 |
| Adjustments to reconcile net earnings to net cash (used for) |
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| provided by operating activities - |
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| Depreciation | 2,775 |
| 2,967 |
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| Amortization | 263 |
| 280 |
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| Bad debt expense | 195 |
| 121 |
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| Deferred income taxes | (47) |
| (945) |
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| Net foreign currency transaction losses | 174 |
| 425 |
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| Stock-based compensation | 1,046 |
| 948 |
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| Pension contribution | (1,300) |
| (1,282) |
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| Pension expense | 1,659 |
| 2,766 |
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| Other-than-temporary investment impairment | - |
| 200 |
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| Increase in cash surrender value of life insurance | (250) |
| (250) |
| Changes in operating assets and liabilities - |
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| Accounts receivable | (14,702) |
| (13,267) |
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| Inventories | (1,039) |
| 12,648 |
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| Prepaid expenses and other assets | 1,556 |
| 3,303 |
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| Accounts payable | (5,594) |
| (4,451) |
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| Accrued liabilities and other | (418) |
| (2,144) |
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| Accrued income taxes | 1,010 |
| 1,563 |
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| Net cash (used for) provided by operating activities | (3,376) |
| 13,873 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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| Purchase of marketable securities | (7,427) |
| (22) |
| Proceeds from maturities of marketable securities | 7,001 |
| 9,833 |
| Life insurance premiums paid | (155) |
| (155) |
| Investment in real estate | - |
| (3,206) |
| Purchase of property, plant and equipment | (1,908) |
| (1,912) |
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| Net cash (used for) provided by investing activities | (2,489) |
| 4,538 |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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| Cash dividends paid | (7,999) |
| (3,881) |
| Shares purchased and retired | (3,996) |
| (4,623) |
| Proceeds from stock options exercised | 1,226 |
| 3,558 |
| Payment of contingent consideration | - |
| (1,270) |
| Proceeds from bank borrowings | 70,757 |
| 11,000 |
| Repayments of bank borrowings | (58,470) |
| (31,000) |
| Income tax benefits from stock-based compensation | 85 |
| 514 |
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| Net cash provided by (used for) financing activities | 1,603 |
| (25,702) |
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| Effect of exchange rate changes on cash and cash equivalents | 21 |
| (247) |
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| Net decrease in cash and cash equivalents | $ (4,241) |
| $ (7,538) |
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CASH AND CASH EQUIVALENTS at beginning of period | 15,969 |
| 17,288 |
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CASH AND CASH EQUIVALENTS at end of period | $ 11,728 |
| $ 9,750 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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| Income taxes paid, net of refunds | $ 5,501 |
| $ 4,784 |
| Interest paid | $ 84 |
| $ 266 |
CONTACT: John Wittkowske, Senior Vice President and Chief Financial Officer, 414-908-1880
