Weyco Reports First Quarter Sales And Earnings

MILWAUKEE, May 2, 2017 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ: WEYS) (the "Company") today announced financial results for the quarter ended March 31, 2017.

Net sales for the first quarter of 2017 were $69.1 million, down 12% as compared to first quarter 2016 net sales of $78.9 million. Earnings from operations were $3.5 million in the first quarter of 2017, a decrease of 18% as compared to $4.2 million in the first quarter of 2016. Net earnings attributable to the Company were $2.2 million in the first quarter of 2017, down 17% as compared to $2.7 million in last year's first quarter. Diluted earnings per share were $0.21 in the first quarter of 2017, as compared to $0.25 in the first quarter of 2016.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $52.9 million for the first quarter of 2017, down 15% as compared to $62.2 million in the first quarter of 2016. Within the wholesale segment, net sales of the Nunn Bush, Stacy Adams and Florsheim brands were down 18%, 16% and 9%, respectively, for the quarter. These sales declines were the result of a challenging retail environment, particularly at our customers' brick and mortar locations, where foot traffic has declined due to the growing popularity of online retailing. BOGS first quarter net sales were down 21%, reflecting the continued softness in the outdoor and better footwear channels. Licensing revenues were $701,000 in the first quarter of 2017, up 15% as compared to $610,000 in last year's first quarter. The increase in licensing revenues resulted mainly from a licensee transition that occurred in 2016. The new licensee was operational by the first quarter of 2017, resulting in increased revenues compared to the same period last year.

Gross earnings for the North American wholesale segment were 30.8% of net sales in the first quarter of 2017, as compared to 29.2% of net sales in last year's first quarter. Earnings from operations for the wholesale segment were $3.2 million in the first quarter of 2017, down 15% as compared to $3.7 million in 2016, largely due to the decrease in wholesale 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 $4.9 million in the first quarter of 2017, down 3% as compared to $5.1 million in the first quarter of 2016. Same stores sales (which include U.S. internet sales) were down 7% for the quarter due to decreased sales at brick and mortar stores and on the Company's websites. There were the same number of domestic retail stores operating during the first quarters of 2017 and 2016, as one store closed and one store opened over the past twelve months. Retail sales in 2017 were impacted by the later timing of the Easter holiday in 2017 as compared to 2016, which caused sales to shift into April this year. Earnings from operations for the retail segment were $43,000 in the first quarter of 2017, as compared to $246,000 in 2016. The decrease was mainly due to the decrease in retail sales.

Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $11.3 million in the first quarter of 2017, down 2% as compared to $11.6 million in the first quarter of 2016. The decrease was primarily due to lower net sales at Florsheim Australia. Florsheim Australia's net sales were down 1% for the quarter. In local currency, Florsheim Australia's net sales were down 6% for the quarter. Earnings from operations of Florsheim Australia and Florsheim Europe were $250,000 in the first quarter of 2017, and $236,000 in the first quarter of 2016.

"The retail environment continues to be challenging, as retailers address reduced foot traffic in their brick and mortar stores," stated Thomas Florsheim, Jr., Chairman and CEO. "We continue to seek growth across all trade channels and are working to reduce our costs. This quarter we saw higher gross margins and reductions in several categories of selling and administrative costs as a result of our efforts."

On May 2, 2017, the Company's Board of Directors declared a cash dividend of $0.22 per share to all shareholders of record on May 26, 2017, payable June 30, 2017. This represents an increase of 5% above the previous quarterly dividend rate of $0.21.

Conference Call Details:

Weyco Group will host a conference call on May 3, 2017, at 11:00 a.m. Eastern Time to discuss the first 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: http://www.yourconferencecenter.com/r.aspx?p=1&a=UjEQtbBmtlxRsY. 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: http://edge.media-server.com/m/p/xhpkanwt. 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, 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)




Three Months Ended March 31, 


2017


2016


(In thousands, except per share amounts)





Net sales

$  69,120


$  78,900

Cost of sales

43,892


51,773

Gross earnings

25,228


27,127






Selling and administrative expenses

21,769


22,920

Earnings from operations

3,459


4,207






Interest income 

179


204

Interest expense

(7)


(73)

Other expense, net

(135)


(238)






Earnings before provision for income taxes

3,496


4,100






Provision for income taxes

1,381


1,468






Net earnings

2,115


2,632






Net loss attributable to noncontrolling interest

(102)


(55)






Net earnings attributable to Weyco Group, Inc.

$    2,217


$    2,687






Weighted average shares outstanding





Basic

10,435


10,657


Diluted

10,498


10,693






Earnings per share





Basic

$      0.21


$      0.25


Diluted

$      0.21


$      0.25






Cash dividends declared (per share)

$      0.21


$      0.20











Comprehensive income

$    2,875


$    4,126






Comprehensive income attributable to noncontrolling interest

166


172






Comprehensive income attributable to Weyco Group, Inc.

$    2,709


$    3,954

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)










March 31,
2017


December 31,
2016


(Dollars in thousands)

ASSETS:

Cash and cash equivalents

$    21,473


$           13,710

Marketable securities, at amortized cost

4,756


4,601

Accounts receivable, net

47,762


50,726

Income tax receivable

-


789

Inventories

55,134


69,898

Prepaid expenses and other current assets

3,076


6,203

     Total current assets

132,201


145,927





Marketable securities, at amortized cost

19,283


21,061

Deferred income tax benefits

701


660

Property, plant and equipment, net

33,345


33,717

Goodwill

11,112


11,112

Trademarks

32,978


32,978

Other assets

22,762


22,785

     Total assets

$  252,382


$         268,240









LIABILITIES AND EQUITY:

Short-term borrowings

$           -


$             4,268

Accounts payable

4,844


11,942

Dividend payable

-


2,192

Accrued liabilities

9,275


10,572

Accrued income tax payable

193


-

     Total current liabilities

14,312


28,974





Deferred income tax liabilities

801


703

Long-term pension liability

27,716


27,801

Other long-term liabilities

2,453


2,482





Common stock

10,430


10,505

Capital in excess of par value

50,911


50,184

Reinvested earnings

155,182


157,468

Accumulated other comprehensive loss

(16,077)


(16,569)

     Total Weyco Group, Inc. equity

200,446


201,588

Noncontrolling interest

6,654


6,692

     Total equity

207,100


208,280

     Total liabilities and equity

$  252,382


$         268,240

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)






Three Months Ended March 31,




2017


2016




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$   2,115


$   2,632


Adjustments to reconcile net earnings to net cash





 provided by operating activities - 






Depreciation

1,001


919



Amortization

97


99



Bad debt expense (income)

133


(142)



Deferred income taxes

10


144



Net foreign currency transaction losses (gains)

1


(149)



Stock-based compensation

369


364



Pension expense

266


767



Increase in cash surrender value of life insurance

(135)


(135)


Changes in operating assets and liabilities - 






Accounts receivable

2,823


(4,950)



Inventories

14,765


22,313



Prepaid expenses and other assets

3,210


1,715



Accounts payable

(7,096)


(8,571)



Accrued liabilities and other

(1,291)


(2,005)



Accrued income taxes

981


528



    Net cash provided by operating activities

17,249


13,529







CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase of marketable securities

(250)


(1,501)


Proceeds from maturities of marketable securities

1,850


1,475


Purchase of property, plant and equipment

(416)


(924)



     Net cash provided by (used for) investing activities

1,184


(950)







CASH FLOWS FROM FINANCING ACTIVITIES:





Cash dividends paid

(4,378)


(4,272)


Cash dividends paid to noncontrolling interest of subsidiary

(204)


-


Shares purchased and retired

(2,393)


(2,895)


Proceeds from stock options exercised

356


12


Payment of contingent consideration

-


(5,217)


Proceeds from bank borrowings

6,816


31,299


Repayments of bank borrowings

(11,084)


(33,314)


Income tax benefits from stock-based compensation

15


-



     Net cash used for financing activities

(10,872)


(14,387)








Effect of exchange rate changes on cash and cash equivalents

202


199








Net increase (decrease) in cash and cash equivalents

$   7,763


$ (1,609)







CASH AND CASH EQUIVALENTS at beginning of period

13,710


17,926







CASH AND CASH EQUIVALENTS at end of period

$ 21,473


$ 16,317







SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$      308


$      693


Interest paid

$          7


$        73



CONTACT: John Wittkowske, Senior Vice President and Chief Financial Officer, 414-908-1880


The following information was filed by Weyco Group Inc (WEYS) on Tuesday, May 2, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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