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Weyco Reports Second Quarter Sales and Earnings

August 2, 2011

MILWAUKEE, Aug. 2, 2011 /PRNewswire/ — Weyco Group, Inc. (NASDAQ:WEYS) (the “Company”) today announced financial results for the quarter ended June 30, 2011.

Net sales for the second quarter were $56.6 million, an increase of 16% from 2010 sales of $48.7 million. Operating earnings for the second quarter of 2011 were $2.7 million, compared to $1.7 million in 2010. Net earnings attributable to the Company were $1.9 million, compared to $1.3 million in 2010. Diluted earnings per share increased to $.17 per share in 2011 from $.11 per share in the second quarter of 2010.

On March 2, 2011, the Company acquired 100% of the outstanding shares of The Combs Company (“Bogs”), the owner of the BOGS and Rafters footwear brands. The financial results of Bogs are included in the Company’s consolidated financial statements from the date of acquisition. Bogs had approximately $27 million of sales during 2010. The Company believes that the acquisition will be accretive to its earnings in 2011, excluding the impact of certain purchase accounting adjustments as well as transaction and integration costs. Most of that accretion is expected in the second half of the year, as the majority of Bogs’ business occurs in the third and fourth quarters.

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $39.4 million for the second quarter of 2011, compared with $35.3 million in 2010. Wholesale sales were $38.7 million in the second quarter of 2011, up from $34.8 million in 2010. Wholesale net sales for the second quarter of 2011 included Bogs’ sales of $2.6 million. Wholesale net sales of Stacy Adams footwear were up 14% this year, while Nunn Bush and Florsheim sales were down 2% and 1%, respectively. Licensing revenues were $650,000 in 2011 and $470,000 in 2010. Bogs’ licensing revenues were $143,000 for the second quarter of 2011. Operating earnings for the segment decreased approximately $725,000 for the second quarter. This was the result of slightly lower margins and higher selling and administrative expenses, which was primarily due to the inclusion of Bogs’ second quarter operations. Bogs had an operating loss this quarter, as sales in the second quarter are typically low during this period due to seasonality, and most operating costs are fixed in nature. In addition, there were transition costs this year associated with moving Bogs’ operations from Eugene, Oregon to the Company’s Glendale, Wisconsin facility. This transition was completed by June 30, 2011.

Net sales in the North American retail segment, which include sales from the Company’s 31 Florsheim retail stores in the United States and its Internet business, were $5.9 million in the second quarter of 2011, compared with $5.3 million in 2010, an increase of 11%. Same store sales were up 19% for the quarter. There were four fewer domestic retail stores during the second quarter of 2011 compared to 2010. Operating earnings for the segment improved by approximately $360,000 for the quarter. This was the result of higher sales volumes and flat selling and administrative expenses.

Other net sales, which include the wholesale and retail sales of Florsheim Australia and Florsheim Europe, were $11.3 million in the second quarter of 2011, compared to $8.1 million in 2010. The majority of other net sales are generated by Florsheim Australia. Florsheim Australia’s net sales were up 39%. In local currency, net sales were up 16%, reflecting higher sales in both its wholesale and retail businesses. The additional increase in U.S. dollars was caused by the weaker U.S. dollar relative to the Australian dollar this year. Florsheim Europe’s sales increased due to higher wholesale shipments. Collectively, the operating earnings of the Company’s other businesses were $1.5 million in the second quarter of 2011 compared with $96,000 in the same period last year, primarily due to higher sales and gross margins achieved at Florsheim Australia.

“Our new BOGS and Rafters brands are starting to provide some top-line growth to our overall business,” stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group, Inc. “However, this quarter is still off-season for the majority of their products, so we have yet to see bottom line growth. We have completed the integration of Bogs into our operations, and we look forward to the second half of the year, which is the main selling season for the BOGS brand.”

On August 1, 2011, the Company’s Board of Directors declared a quarterly cash dividend of $.16 per share to all shareholders of record September 1, 2011, payable October 1, 2011.

Weyco Group will host a conference call on August 3, 2011 at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail. To participate in the call please dial 888-713-4209 or 617-213-4863, referencing passcode #72087311, 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 or 617-801-6888, referencing passcode #24229730. 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
        FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED)

                          Three Months Ended             Six Months Ended
                               June 30,                      June 30,
                        2011             2010         2011          2010
                        ----             ----         ----          ----
                            (In thousands, except per share amounts)

    Net sales        $56,550          $48,724     $121,696      $109,762
    Cost of sales     33,887           30,066       74,208        67,696
                      ------           ------       ------        ------
    Gross earnings    22,663           18,658       47,488        42,066

    Selling and
     administrative
     expenses         19,930           16,972       39,946        34,939
                      ------           ------       ------        ------
    Earnings from
     operations        2,733            1,686        7,542         7,127

    Interest income      586              607        1,176         1,105
    Interest expense    (137)             (87)        (227)          (87)
    Other income and
     expense, net         52             (351)         108          (218)
                         ---             ----          ---          ----

    Earnings before
     provision for
     income taxes      3,234            1,855        8,599         7,927

    Provision for
     income taxes        946              774        2,809         2,864
                         ---              ---        -----         -----

    Net earnings       2,288            1,081        5,790         5,063

    Net earnings
     (loss)
     attributable to
     noncontrolling
     interest            351           (201)       481         (76)
                         ---             ----          ---           ---

    Net earnings
     attributable to
     Weyco Group,
     Inc.             $1,937           $1,282       $5,309        $5,139
                      ======           ======       ======        ======

    Weighted average
     shares
     outstanding
      Basic           11,120           11,326       11,221        11,309
      Diluted         11,239           11,533       11,358        11,514

    Earnings per
     share
      Basic            $0.17            $0.11        $0.47         $0.45
                       =====            =====        =====         =====
      Diluted          $0.17            $0.11        $0.47         $0.45
                       =====            =====        =====         =====

    Cash dividends
     per share         $0.16            $0.16        $0.32         $0.31
                       =====            =====        =====         =====

                        WEYCO GROUP, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

                                              June 30,       December 31,
                                                   2011               2010
                                                   ----               ----
                                                 (Dollars in thousands)
    ASSETS:
    Cash and cash equivalents                   $10,175             $7,150
    Marketable securities, at amortized cost      3,066              4,989
    Accounts receivable, net                     34,830             38,840
    Accrued income tax receivable                 2,149                  -
    Inventories                                  54,575             56,111
    Prepaid expenses and other current assets     3,912              4,398
                                                  -----              -----
         Total current assets                   108,707            111,488

    Marketable securities, at amortized cost     56,034             58,059
    Deferred income tax benefits                  2,413              1,090
    Other assets                                 17,846             14,375
    Property, plant and equipment, net           27,624             25,675
    Goodwill                                     11,027                  -
    Trademarks                                   34,748             12,748
                                                 ------             ------
         Total assets                          $258,399           $223,435
                                               ========           ========

    LIABILITIES AND EQUITY:
    Short-term borrowings                       $35,950             $5,000
    Accounts payable                              7,380             10,360
    Dividend payable                              1,756              1,811
    Accrued liabilities                           9,750             10,204
    Accrued income taxes                              -                116
    Deferred income tax liabilities                 790                228
                                                    ---                ---
         Total current liabilities               55,626             27,719

    Long-term pension liability                  19,306             18,572
    Other long-term liabilities                  11,753                  -

    Common stock                                 10,986             11,356
    Capital in excess of par value               21,131             19,548
    Reinvested earnings                         142,521            150,546
    Accumulated other comprehensive loss         (8,232)            (9,004)
                                                 ------             ------
         Total Weyco Group, Inc. equity         166,406            172,446
    Noncontrolling interest                       5,308              4,698
                                                  -----              -----
         Total equity                           171,714            177,144
                                                -------            -------
         Total liabilities and equity          $258,399           $223,435
                                               ========           ========

                    WEYCO GROUP, INC. AND SUBSIDIARIES
       CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

                                                            Six Months Ended
                                                                June 30,
                                                            2011         2010
                                                            ----         ----
                                                               (Dollars in
                                                               thousands)
    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net earnings                                        $5,790       $5,063
      Adjustments to reconcile net earnings to net cash
       provided by operating activities -
        Depreciation                                       1,342        1,386
        Amortization                                          83           60
        Bad debt expense                                      99           65
        Deferred income taxes                               (957)        (475)
        Net foreign currency transaction (gains)
         losses                                             (121)         213
        Stock-based compensation                             597          569
        Pension expense                                    1,474        1,624
        Net gains on disposal of assets                      (13)           -
        Increase in cash surrender value of life
         insurance                                          (127)        (120)
      Changes in operating assets and liabilities, net of
       effects from acquisitions -
        Accounts receivable                                8,083        1,930
        Inventories                                        4,662        2,843
        Prepaids and other current assets                  1,060          175
        Accounts payable                                  (3,484)      (2,574)
        Accrued liabilities and other                     (1,320)        (900)
        Accrued income taxes                              (2,281)      (1,972)
                                                          ------       ------
            Net cash provided by operating activities     14,887        7,887
                                                          ------        -----

    CASH FLOWS FROM INVESTING ACTIVITIES:
      Acquisition of business, net of cash acquired     (27,023)       (2,509)
      Purchase of marketable securities                      (80)    (21,802)
      Proceeds from maturities of marketable
       securities                                          4,035        3,648
      Proceeds from the sale of assets                        13            -
      Life insurance premiums paid                          (155)        (155)
      Purchase of property, plant and equipment           (3,117)        (646)
                                                          ------         ----
             Net cash used for investing activities     (26,327)     (21,464)
                                                         -------      -------

    CASH FLOWS FROM FINANCING ACTIVITIES:
      Cash dividends paid                                 (3,634)      (3,401)
      Shares purchased and retired                      (10,205)         (753)
      Proceeds from stock options exercised                  725          607
      Repayment of debt assumed in acquisition            (3,814)           -
      Net borrowings of commercial paper                  19,950            -
      Proceeds from bank borrowings                       31,000            -
      Repayments of bank borrowings                     (20,000)            -
      Income tax benefits from stock-based
       compensation                                          341          331
                                                             ---          ---
             Net cash provided by (used for) financing
              activities                                  14,363       (3,216)
                                                          ------       ------

      Effect of exchange rate changes on cash and
       cash equivalents                                      102          (98)
                                                             ---          ---

      Net increase (decrease) in cash and cash
       equivalents                                         3,025     (16,891)

    CASH AND CASH EQUIVALENTS at beginning of
     period                                               $7,150      $30,000
                                                          ======      =======

    CASH AND CASH EQUIVALENTS at end of period           $10,175      $13,109
                                                         =======      =======

    SUPPLEMENTAL CASH FLOW INFORMATION:
      Income taxes paid, net of refunds                   $4,751       $5,352
                                                          ======       ======
      Interest paid                                         $221          $82
                                                            ====          ===

SOURCE Weyco Group, Inc.


Source: newswire



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