Weyco Reports Second Quarter Sales And Earnings

MILWAUKEE, Aug. 6, 2019 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ: WEYS) (the "Company") today announced financial results for the quarter ended June 30, 2019.

Net sales for the second quarter of 2019 were $60.5 million, down 1% compared to second quarter 2018 net sales of $60.9 million. Earnings from operations were approximately $1.9 million in both the second quarters of 2019 and 2018. Net earnings attributable to the Company were $1.5 million for the quarter, down 7% compared to $1.6 million in last year's second quarter. Diluted earnings per share were $0.15 per share in both the second quarters of 2019 and 2018.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $46.1 million for the second quarter of 2019, up 1% compared to $45.6 million in the second quarter of 2018. Within the wholesale segment, BOGS and Florsheim second quarter net sales rose 48% and 14%, respectively, due to sales volume increases across most major distribution channels. These sales increases were offset by lower sales of the Nunn Bush and Stacy Adams brands. Nunn Bush sales declined 20%, as compared to the same period last year, due to lower sales to department stores and national shoe chains. Stacy Adams sales were down 6% for the quarter, due to lower sales to department stores. Licensing revenues were $636,000 in the second quarter of 2019 and $472,000 in last year's second quarter.

Gross earnings for the North American wholesale segment were 35.1% of net sales in the second quarter of 2019, compared to 33.3% of net sales in last year's second quarter. Earnings from operations for the wholesale segment rose 27% to $2.2 million in the second quarter of 2019, from $1.7 million in last year's second quarter, due to higher sales and gross margins. The improvement in gross margins mainly resulted from stable pricing from the Company's overseas suppliers and selective price increases.

Net sales in the North American retail segment, which include sales from the Company's Florsheim retail stores and its e-commerce businesses in the United States, were $5.4 million in the second quarter of 2019, up 17% compared to $4.6 million in the second quarter of 2018. Same store sales (which include U.S. e-commerce sales) were up 14% for the quarter due to increased sales on the Company's websites. Retail earnings from operations rose to $401,000 this quarter, from $222,000 in last year's second quarter, due mainly to higher online sales volumes.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $9.0 million in the second quarter of 2019, down 15% compared to $10.6 million in the second quarter of 2018. This decrease was primarily due to a 10% decline in net sales at Florsheim Australia, caused mainly by the translation of the weaker Australian currency into U.S. dollars. Florsheim Australia's net sales in local currency were down 3% for the quarter, with lower sales in both its retail and wholesale businesses. Collectively, Florsheim Australia and Florsheim Europe had operating losses totaling $749,000 in the second quarter of 2019, compared to operating losses of $23,000 in the second quarter of 2018. The decline between years was primarily due to lower sales, lower overall gross margins, and higher operating costs at Florsheim Australia.

On August 1, 2019, it was announced that the U.S. would impose an additional 10% tariff on certain categories of consumer goods exported from China, including footwear. As the Company sources a significant portion of its footwear from China, this tariff is expected to increase the overall cost of its footwear. At this time, the expected impact of the tariffs on the Company's gross margins, results of operations and overall financial statements is unknown.

"Our North American businesses had another good quarter, driven by strong performance of our Florsheim and BOGS brands at wholesale and on our websites," stated Thomas W. Florsheim, Jr., the Company's Chairman and CEO. "The growth in these segments was offset by losses in our international businesses due to the soft retail environment overseas. As we move into the second half of the year, we remain focused on growing our brands domestically, as well as improving the profitability of our international businesses. Relating to the proposed tariffs, we intend to try to mitigate the overall impact of these cost increases through a combination of wholesale price increases and cost reductions from our suppliers."

On August 6, 2019, the Company's Board of Directors declared a cash dividend of $0.24 per share to all shareholders of record on August 29, 2019, payable September 30, 2019.

Conference Call Details:

Weyco Group will host a conference call on August 7, 2019, 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=UsKdKInmLaPhpx. 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/mmc/p/demus8qv. 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 principally for men, but also for 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, as well as on e-commerce websites 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, 



2019


2018


2019


2018



(In thousands, except per share amounts)










Net sales

$  60,476


$ 60,888


$  134,604


$ 130,414

Cost of sales

36,073


37,182


81,437


80,083

Gross earnings

24,403


23,706


53,167


50,331










Selling and administrative expenses

22,539


21,759


46,157


44,817

Earnings from operations

1,864


1,947


7,010


5,514










Interest income 

230


254


453


487

Interest expense

(34)


-


(66)


-

Other expense, net

(128)


(176)


(253)


(219)










Earnings before provision for income taxes

1,932


2,025


7,144


5,782










Provision for income taxes

418


502


1,662


1,443










Net earnings

1,514


1,523


5,482


4,339










Net loss attributable to noncontrolling interest

-


(103)


-


(274)










Net earnings attributable to Weyco Group, Inc.

$  1,514


$ 1,626


$   5,482


$   4,613










Weighted average shares outstanding








      Basic

9,938


10,214


9,943


10,194

      Diluted

10,033


10,505


10,030


10,433










Earnings per share








      Basic

$     0.15


$   0.16


$     0.55


$    0.45

      Diluted

$     0.15


$   0.15


$     0.55


$    0.44










Cash dividends declared (per share)

$     0.24


$   0.23


$     0.47


$     0.45



















Comprehensive income

$   1,737


$     650


$   5,943


$   3,465

Comprehensive loss attributable to noncontrolling interest

-


(383)


-


(588)

Comprehensive income attributable to Weyco Group, Inc.

$   1,737


$   1,033


$   5,943


$   4,053











WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)













June 30,


December 31,



2019


2018



(Dollars in thousands)

ASSETS:

Cash and cash equivalents


$        9,681


$   22,973

Marketable securities, at amortized cost


10,820


1,525

Accounts receivable, net


39,275


51,533

Income tax receivable


649


-

Inventories


82,757


72,684

Prepaid expenses and other current assets


3,107


5,380

     Total current assets


146,289


154,095






Marketable securities, at amortized cost


17,966


18,702

Deferred income tax benefits


1,270


1,277

Property, plant and equipment, net


29,460


28,707

Operating lease right-of-use assets


23,280


-

Goodwill


11,112


11,112

Trademarks


32,868


32,868

Other assets


23,569


23,283

     Total assets


$    285,814


$   270,044






LIABILITIES AND EQUITY:





Short-term borrowings


$      12,001


$       5,840

Accounts payable


5,155


12,764

Dividend payable


-


2,308

Operating lease liabilities


7,878


-

Accrued liabilities


10,832


14,306

Accrued income tax payable


-


912

     Total current liabilities


35,866


36,130






Deferred income tax liabilities


3,738


3,724

Long-term pension liability


23,129


23,112

Operating lease liabilities


17,015


-

Other long-term liabilities


181


1,495

     Total liabilities


79,929


64,461






Common stock


10,002


10,057

Capital in excess of par value


65,141


64,263

Reinvested earnings


151,853


152,835

Accumulated other comprehensive loss


(21,111)


(21,572)

     Total Weyco Group, Inc. equity


205,885


205,583

     Total liabilities and equity


$     285,814


$   270,044

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)











Six Months Ended June 30,




2019


2018




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$     5,482


$     4,339


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






Depreciation

1,650


1,905



Amortization

125


171



Bad debt expense

79


160



Deferred income taxes

(61)


841



Net foreign currency transaction losses

18


105



Share-based compensation expense

731


805



Pension contribution

-


(3,000)



Pension expense

523


426



Increase in cash surrender value of life insurance

(115)


(115)


Changes in operating assets and liabilities - 






Accounts receivable

12,142


11,464



Inventories

(10,065)


3,714



Prepaid expenses and other assets

2,095


2,527



Accounts payable

(7,612)


(3,008)



Accrued liabilities and other

(3,194)


(5,213)



Accrued income taxes

(1,558)


(1,111)



    Net cash provided by operating activities

240


14,010







CASH FLOWS FROM INVESTING ACTIVITIES:





Purchases of marketable securities

(10,183)


(5,961)


Proceeds from maturities of marketable securities

1,645


3,375


Life insurance premiums paid

(155)


(155)


Purchases of property, plant and equipment

(2,414)


(491)



     Net cash used for investing activities

(11,107)


(3,232)







CASH FLOWS FROM FINANCING ACTIVITIES:





Cash dividends paid

(6,978)


(6,836)


Cash dividends paid to noncontrolling interest of subsidiary

-


(88)


Shares purchased and retired

(1,828)


(6,589)


Net proceeds from stock options exercised

161


4,048


Taxes paid related to the net share settlement of equity awards

(5)


(611)


Proceeds from bank borrowings

75,474


-


Repayments of bank borrowings

(69,313)


-



     Net cash used for financing activities

(2,489)


(10,076)








Effect of exchange rate changes on cash and cash equivalents

64


(157)








Net (decrease) increase in cash and cash equivalents

$    (13,292)


$        545







CASH AND CASH EQUIVALENTS at beginning of period

22,973


23,453







CASH AND CASH EQUIVALENTS at end of period

$       9,681


$    23,998







SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$      3,112


$     1,927


Interest paid

$           66


$             -



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, August 6, 2019 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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