MILWAUKEE, Feb. 23 /PRNewswire-FirstCall/ -- Weyco Group, Inc. (Nasdaq: WEYS), today announced record financial results for the fourth quarter and full year 2004.
| -- | Diluted earnings per share increased 25.3% to a record $1.14 compared with $.91 in 2003. |
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| -- | Net sales totaled $55.6 million compared with $54.6 in 2003, an increase of 2%. Wholesale sales were $46.4 in 2004, versus $46.1 in 2003, an increase of approximately 1%. The Company’s Stacy Adams and Florsheim brands were up 11% and 2%, respectively, with the Company’s Nunn Bush brand down 7%. Retail sales increased 9.7% to $7.85 million up from $7.15 million in 2003. Same store sales were up 12.6%. Licensing revenue, which is included in net sales, was $1.4 million in 2004 as compared with $1.3 million in 2003. |
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| -- | Operating earnings increased 29.3% to $11.0 million or 19.9% of net sales, compared with $8.5 million or 15.7% of net sales in 2003. The increase in operating earnings results from an increase in overall gross margins of approximately 280 basis points and a decrease in selling and administrative expenses from 23.9% of net sales to 22.5% of net sales. The increased margins were across all of the Company’s brands, and in the Company’s retail division. |
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| -- | Net earnings grew by 26.5% to $6.8 million or 12.2% of sales, versus $5.4 million or 9.8% of net sales in 2003. The 26.5% increase in net earnings was lower than the 29.3% increase in operating earnings because of a higher effective tax rate in 2004, the effect of which was partially offset by lower interest expense as Company debt levels continued to decline. |
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| 2004 Highlights: |
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| -- | Diluted earnings per share increased by 18.6% to a record $3.45 as compared with $2.91 in 2003. |
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| -- | Net sales were $223.0 million, up 3.4% from 2003 net sales of $215.8 million. Wholesale sales rose 2.8% to $192.6 million as compared with $187.3 million in 2003. The Company’s Stacy Adams and Florsheim brands were up 9% and 1%, respectively. Sales of the Nunn Bush brand were flat in 2004. Retail sales increased 6.4% to$26.5 million as compared with $24.9 million in 2003. Same store retail sales were up 8.9% in 2004. Licensing revenue was $3.9 million in 2004 as compared with $3.6 million in 2003. |
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| -- | Operating earnings increased 20.9% to $33.0 million or 14.8% of net sales compared with $27.3 million or 12.6% of net sales. The increase was principally the result of overall higher gross margins of 180 basis points. Gross margin increases were seen across all the Company’s brands and in the Company’s retail division. |
| -- | Net earnings grew by 18.3% to $20.3 million or 9.1% of net sales, as compared with $17.1 million or 7.9% of net sales. |
During 2004, the Company’s balance sheet continued to strengthen. The Company’s cash and marketable securities totaled $21.8 million at December 31,2004, an increase of $2.2 million. At the same time, borrowings under the Company’s revolving credit agreement decreased $16.6 million to $11.4 million. The Company’s cash and marketable securities now exceed outstanding borrowings by $10.4 million.
“2004 was an outstanding year for our Company,” stated Tom Florsheim, Jr., Chief Executive Officer, Weyco Group, Inc. “We are pleased with the growth in our wholesale business, as well as the performance of our retail stores.
“Our Florsheim wholesale business was strong in the second half of the year which enabled us to end 2004 with a slight increase in wholesale sales for the brand. We continue to focus on building Florsheim for the long-term and have made significant progress in terms of realigning Florsheim’s distribution to department stores and better specialty stores. Our Florsheim retail division’s business was robust in 2004, which reflects positively on the new product initiatives we have in place for the brand.
“Stacy Adams’ record year in dress shoe sales fueled the significant wholesale growth for the brand. In addition to strong footwear sales, we had an excellent year in terms of U. S. licensed products sales which led to a solid increase in Stacy Adams’ licensing revenues related to those products.
“While sales for the quarter for our Nunn Bush brand were down, Nunn Bush continues to perform well at retail in a challenging environment for mid-tier department store and shoe chains. Sales were flat for the year and Nunn Bush remains a major player in the men’s moderately priced branded footwear market.”
On January 31, 2005, the Company announced a 2:1 stock split to shareholders of record on February 16, 2005, and to be distributed on April 1, 2005. No amounts in this release have been restated as a result of this stock split.
Weyco Group will host a conference call on Thursday, February 24, at 11:00 a.m. Eastern Time to discuss the fourth quarter and year end 2004 financial results in more detail. To participate in the call please dial (800) 901-5218, referencing passcode #98282670, five minutes before the start of the call. A replay will be available for one week beginning about one hour after the completion of the call by dialing (888) 286-8010, referencing passcode #25948472. Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group’s website at http://www.weycogroup.com .
Weyco Group, Inc., designs and markets moderately priced and better-grade men’s branded footwear for casual, fashion, and dress lifestyles. The principal brands of shoes sold by the Company are Florsheim, Nunn Bush, Nunn Bush NXXT, Brass Boot, Stacy Adams and SAO by Stacy Adams. The Company also operates a small number of retail stores in the U.S. and Europe.
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.
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
| | For the Quarter Ended
December 31, | | For the Year Ended
December 31, | |
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| | 2004 | | 2003 | | 2004 | | 2003 | |
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NET SALES | | $ | 55,642,505 | | $ | 54,563,067 | | $ | 223,013,334 | | $ | 215,760,531 | |
COST OF SALES | | | 32,049,988 | | | 32,959,701 | | | 140,017,783 | | | 139,315,498 | |
Gross earnings | | | 23,592,517 | | | 21,603,366 | | | 82,995,551 | | | 76,445,033 | |
SELLING AND ADMINISTRATIVE EXPENSES | | | 12,541,286 | | | 13,055,488 | | | 50,043,981 | | | 49,184,303 | |
Earnings from operations | | | 11,051,231 | | | 8,547,878 | | | 32,951,570 | | | 27,260,730 | |
INTEREST INCOME | | | 140,139 | | | 126,035 | | | 500,605 | | | 528,531 | |
INTEREST EXPENSE | | | (109,546 | ) | | (290,332 | ) | | (477,807 | ) | | (1,374,682 | ) |
OTHER INCOME AND EXPENSE, net | | | (26,293 | ) | | 32,608 | | | (71,694 | ) | | 275,222 | |
Earnings before provision for income taxes | | | 11,055,531 | | | 8,416,189 | | | 32,902,674 | | | 26,689,801 | |
PROVISION FOR INCOME TAXES | | | 4,275,000 | | | 3,055,000 | | | 12,625,000 | | | 9,555,000 | |
Net earnings | | $ | 6,780,531 | | $ | 5,361,189 | | $ | 20,277,674 | | $ | 17,134,801 | |
BASIC EARNINGS PER SHARE | | $ | 1.18 | | $ | .94 | | $ | 3.56 | | $ | 3.01 | |
DILUTED EARNINGS PER SHARE | | $ | 1.14 | | $ | .91 | | $ | 3.45 | | $ | 2.91 | |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31, 2004 and 2003
| | 2004 | | 2003 | |
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ASSETS | | | | | | | |
CURRENT ASSETS: | | | | | | | |
Cash and cash equivalents | | $ | 10,514,707 | | $ | 9,091,567 | |
Marketable securities, at amortized cost | | | 180,000 | | | 4,206,100 | |
Accounts receivable, net | | | 30,774,337 | | | 29,900,197 | |
Accrued income tax receivable | | | — | | | 228,074 | |
Inventories | | | 47,620,220 | | | 43,727,578 | |
Deferred income tax benefits | | | 1,681,135 | | | 2,483,037 | |
Prepaid expenses and other current assets | | | 1,779,189 | | | 1,042,496 | |
Total current assets | | | 92,549,588 | | | 90,679,049 | |
MARKETABLE SECURITIES, at amortized cost | | | 11,123,795 | | | 6,273,638 | |
OTHER ASSETS | | | 13,904,006 | | | 13,750,574 | |
PLANT AND EQUIPMENT, net | | | 27,910,304 | | | 29,615,025 | |
TRADEMARK | | | 10,867,969 | | | 10,867,969 | |
| | $ | 156,355,662 | | $ | 151,186,255 | |
LIABILITIES AND SHAREHOLDERS’ INVESTMENT | | | | | | | |
CURRENT LIABILITIES: | | | | | | | |
Short-term borrowings | | $ | 11,359,536 | | $ | 27,944,830 | |
Accounts payable | | | 6,661,241 | | | 7,465,606 | |
Dividend payable | | | 631,351 | | | 563,642 | |
Accrued liabilities - | | | | | | | |
Wages, salaries and commissions | | | 3,566,277 | | | 4,335,408 | |
Taxes, other than income taxes | | | 979,853 | | | 376,773 | |
Other | | | 3,950,485 | | | 3,567,665 | |
Accrued income taxes | | | 751,622 | | | — | |
Total current liabilities | | | 27,900,365 | | | 44,253,924 | |
LONG-TERM PENSION LIABILITY | | | 3,312,860 | | | 3,077,285 | |
DEFERRED INCOME TAX LIABILITIES | | | 5,394,516 | | | 5,009,158 | |
SHAREHOLDERS’ INVESTMENT: | | | | | | | |
Common Stock | | | 4,440,565 | | | 4,324,983 | |
Class B Common Stock | | | 1,302,110 | | | 1,305,435 | |
Capital in excess of par value | | | 6,820,136 | | | 4,189,138 | |
Reinvested earnings | | | 106,747,060 | | | 88,917,253 | |
Accumulated other comprehensive income | | | 438,050 | | | 109,079 | |
Total shareholders’ investment | | | 119,747,921 | | | 98,845,888 | |
| | $ | 156,355,662 | | $ | 151,186,255 | |
CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited)
For the years ended December 31, 2004 and 2003
| | 2004 | | 2003 | |
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CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
Net earnings | | $ | 20,277,674 | | $ | 17,134,801 | |
Adjustments to reconcile net earnings to net cash provided by operating activities - | | | | | | | |
Depreciation | | | 2,517,417 | | | 2,322,794 | |
Amortization | | | 80,389 | | | 187,020 | |
Deferred income taxes | | | 1,187,260 | | | 978,527 | |
Deferred compensation | | | 48,000 | | | 197,292 | |
Pension expense | | | 712,959 | | | 992,050 | |
Loss (gain) on sale of assets | | | 116,174 | | | (25,819 | ) |
Increase in cash surrender value of life insurance | | | (579,168 | ) | | (574,371 | ) |
Changes in operating assets and liabilities - | | | | | | | |
Accounts receivable | | | (874,140 | ) | | 2,270,598 | |
Inventories | | | (3,892,642 | ) | | 6,013,355 | |
Prepaids and other current assets | | | (736,693 | ) | | (165,156 | ) |
Accounts payable | | | (804,365 | ) | | (3,803,107 | ) |
Accrued liabilities and other | | | 352,726 | | | (258,149 | ) |
Accrued income taxes | | | 1,519,328 | | | 1,009,700 | |
Net cash provided by operating activities | | | 19,924,919 | | | 26,279,535 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
Acquisition of Florsheim assets | | | — | | | (46,288 | ) |
Purchase of marketable securities | | | (6,106,521 | ) | | (5,163,270 | ) |
Proceeds from maturities of marketable securities | | | 5,262,953 | | | 4,808,799 | |
Purchase of plant and equipment | | | (1,127,088 | ) | | (9,833,660 | ) |
Proceeds from sales of plant and equipment | | | 230,706 | | | 37,623 | |
Net cash used for investing activities | | | (1,739,950 | ) | | (10,196,796 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
Cash dividends paid | | | (2,380,158 | ) | | (2,086,763 | ) |
Shares purchased and retired | | | — | | | (3,361,294 | ) |
Proceeds from stock options exercised | | | 2,203,623 | | | 1,012,943 | |
Net repayments under revolving credit facilities | | | (16,585,294 | ) | | (9,857,162 | ) |
Net cash used for financing activities (16,761,829) | | | (14,292,276 | ) | | | |
Net increase in cash and cash equivalents | | | 1,423,140 | | | 1,790,463 | |
CASH AND CASH EQUIVALENTS, at beginning of year | | $ | 9,091,567 | | $ | 7,301,104 | |
CASH AND CASH EQUIVALENTS, at end of year | | $ | 10,514,707 | | $ | 9,091,567 | |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | |
Income taxes paid, net of refunds | | $ | 10,037,356 | | $ | 7,543,171 | |
Interest paid | | $ | 509,125 | | $ | 1,383,664 | |
SOURCE Weyco Group, Inc.
-0- 02/23/2005
/CONTACT: John Wittkowske, Senior VP and CFO, of Weyco Group, Inc., +1-414-908-1880; or Rob Damron, Managing Director of 21st Century Equity Advisors, +1-414-224-1668/
/Web site: http://www.weycogroup.com /
