MILWAUKEE, May 2 /PRNewswire-FirstCall/ — Weyco Group, Inc. (NASDAQ:WEYS) , today announced financial results for the quarter ended March 31, 2007.
Net earnings grew approximately 7% to $5.7 million, up from $5.3 million in 2006. The $5.7 million of earnings is the highest first quarter earnings ever reported by the Company. Diluted earnings per share increased to $.47 per diluted share in 2007 from $.44 per diluted share in 2006.
Net sales were a record $63.9 million, up 8%, compared with $59.3 million in 2006. Sales in the wholesale division, which include wholesale sales and licensing revenues, were $56.6 million compared with $52.3 million in 2006. Wholesale sales were $55.5 million in 2007, up 8% from $51.2 million in 2006. Licensing revenues were $1.1 million in 2007 and 2006.
In the wholesale division, net sales of the Company’s Florsheim and Stacy Adams brands were up 19% and 10%, respectively, while the Nunn Bush brand was down 4%. The increase at Florsheim was driven by the continued strong sales of its styles at retail, which, in recent years, have been expanded to include more contemporary and casual silhouettes. Additionally, beginning January 1, 2007, the Company began selling Florsheim product in Canada, which had previously been distributed by a third party licensee. This added $1.1 million, or approximately 8%, to the Florsheim sales for the quarter. The Company expects total Florsheim Canadian sales to be approximately $4 to $5 million in 2007. Stacy Adams had increased sales to national shoe chains. Nunn Bush has been performing well at retail, but its first quarter sales were negatively impacted by $1.6 million due to the loss of a significant customer in 2006.
Retail sales were $7.25 million for the first quarter of 2007, up 3.5% from $7.0 million in 2006. This was primarily due to the addition of four new stores since last year. Same store sales were flat.
Operating earnings were $8.7 million, up 6% from $8.2 million in 2006. Operating earnings as a percent of net sales were 13.6% in 2007 and 13.8% in 2006.
“We are very pleased with our overall first quarter wholesale performance, which resulted in record sales and earnings for the Company,” stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group.
The Company’s Board of Directors declared a quarterly cash dividend on May 1, 2007 of $.11 per share to all shareholders of record on June 1, 2007, payable July 2, 2007. This represents an increase of 22% above the previous quarterly dividend rate of $.09. The impact of this will be to increase cash dividends paid annually by approximately $900,000.
Weyco Group will host a conference call on Thursday, May 3, 2007, at 11:00 a.m. Eastern Time to discuss the first quarter financial results in more detail. To participate in the call please dial (866) 578-5788 or (617) 213-8057, referencing passcode #11319825, 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 #85380710. 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, and Stacy Adams. The Company also operates a 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 three months ended March 31, 2007 and 20062007 2006
NET SALES $63,858,057 $59,288,211COST OF SALES 40,806,918 38,255,321
Gross earnings 23,051,139 21,032,890
SELLING AND ADMINISTRATIVE EXPENSES 14,372,827 12,826,628
Earnings from operations 8,678,312 8,206,262
INTEREST INCOME 507,566 461,859
INTEREST EXPENSE (123,035) (178,822)
OTHER INCOME AND EXPENSE, net 1,781 (5,270)Earnings before provision for income
taxes 9,064,624 8,484,029PROVISION FOR INCOME TAXES 3,370,000 3,175,000
Net earnings $ 5,694,624 $ 5,309,029
WEIGHTED AVERAGE SHARES
Basic 11,664,431 11,577,837
Diluted 12,119,780 12,081,328EARNINGS PER SHARE
Basic $.49 $.46
Diluted $.47 $.44CASH DIVIDENDS PER SHARE $.09 $.07
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
March 31, December 31,
2007 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $12,643,572 $15,314,140
Marketable securities, at amortized cost 1,246,245 1,600,871
Accounts receivable, net 40,709,644 30,641,632
Inventories 38,889,077 51,000,849
Deferred income tax benefits 927,161 949,109
Prepaid expenses and other current assets 1,560,790 1,715,859
Total current assets 95,976,489 101,222,460
MARKETABLE SECURITIES, at amortized cost 41,029,406 40,361,296
OTHER ASSETS 8,826,838 8,725,346
PLANT AND EQUIPMENT, net 28,286,459 28,445,900
TRADEMARK 10,867,969 10,867,969
$184,987,161 $189,622,971LIABILITIES & SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Short-term borrowings $8,791,809 $10,957,518
Accounts payable 5,261,199 12,398,740
Dividend payable 1,054,075 1,054,354
Accrued liabilities 7,122,101 8,430,267
Accrued income taxes 2,725,406 72,907
Total current liabilities 24,954,590 32,913,786
LONG-TERM PENSION LIABILITY 6,750,743 6,620,842
DEFERRED INCOME TAX LIABILITIES 1,699,987 1,915,869
SHAREHOLDERS’ INVESTMENT:
Common stock 9,086,456 9,129,256
Class B common stock 2,580,587 2,585,087
Capital in excess of par value 8,109,141 7,576,096
Reinvested earnings 137,124,977 134,264,076
Accumulated other comprehensive loss (5,319,320) (5,382,041)
Total shareholders investment 151,581,841 148,172,474
$184,987,161 $189,622,971CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited)
For the three months ended March 31, 2007 and 20062007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $5,694,624 $ 5,309,029
Adjustments to reconcile net
earnings to net cash provided by
operating activities –
Depreciation 614,908 543,631
Amortization 20,811 15,576
Deferred income taxes (252,934) (234,313)
Stock-based compensation 73,991 —
Pension expense 332,337 298,251
Loss on sale of assets — 13
Increase in cash surrender value of life
insurance (129,630) (125,535)
Changes in operating assets and
liabilities –
Accounts receivable (10,068,012) (9,087,136)
Inventories 12,111,772 7,166,644
Prepaids and other current assets 183,207 353,227
Accounts payable (7,137,541) (5,102,179)
Accrued liabilities and other (1,389,304) (832,671)
Accrued income taxes 2,679,499 1,803,680
Net cash provided by operating
activities 2,733,728 108,217CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (380,321) (9,084,960)
Proceeds from maturities of marketable
securities 46,026 581,072
Purchase of plant and equipment (515,054) (282,097)
Proceeds from sales of plant and equipment 60,000 996
Net cash used for investing activities (789,349) (8,784,989)CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (1,054,354) (810,241)
Shares purchased and retired (1,879,739) (471,606)
Proceeds from stock options exercised 324,840 289,467
Repayments under revolving credit agreement (2,165,709) (59,570)
Income tax benefit from the
exercise of stock options 160,015 156,681
Net cash used for financing activities (4,614,947) (895,269)Net decrease in cash and cash equivalents (2,670,568) (9,572,041)
CASH AND CASH EQUIVALENTS at
beginning of period $15,314,140 $22,780,913CASH AND CASH EQUIVALENTS at end of period $12,643,572 $13,208,872
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds $721,792 $1,201,281Interest paid $170,544 $182,770
First Call Analyst:
FCMN Contact:
Source: Weyco Group, Inc.
