MILWAUKEE, July 26 /PRNewswire-FirstCall/ — Weyco Group, Inc. (NASDAQ:WEYS) , today announced financial results for the quarter ended June 30, 2007.
Net earnings in the quarter grew 11% to $4.0 million, up from $3.6 million in 2006. Diluted earnings per share increased 13% to $.34 per diluted share in 2007 from $.30 per diluted share in 2006.
Second quarter net sales were $48.4 million, up from $45.1 million in 2006. Sales in the wholesale division, which include wholesale sales and licensing revenues, were $40.7 million compared with $38.4 million in 2006. Wholesale sales were $39.9 million in 2007, up from $37.5 million in 2006. Licensing revenues in 2007 were $835,000 compared with $930,000 in 2006.
In the wholesale division, net sales of the Company’s Florsheim and Nunn Bush brands were up 23% and 8%, respectively, while the Stacy Adams brand was down 12%. Approximately half of the increase in Florsheim sales was due to sales of product in Canada, which had previously been distributed by a third party licensee. The Company began distributing its Florsheim brand in Canada on January 1, 2007. Total Florsheim sales in Canada were $1.2 million in the second quarter and $2.3 million for the year. The Company expects Florsheim Canadian sales to be $4 – 5 million in 2007. The remaining increase in Florsheim wholesale sales was driven by increased sales at department stores and national shoe chains. The increase in sales at Nunn Bush resulted from increased sales at department stores, primarily due to the success of the Nunn Bush Comfort Gel product. Second quarter sales of Stacy Adams were hurt because of an early Easter and the continued challenges faced by the independent shoe and clothing retailers.
Retail sales for the second quarter were $7.7 million, up 14% from $6.7 million in 2006. Same store sales were up 9%, with the remaining increase due to three additional stores. Same store sales for the six months ended June 30, 2007 were up 4.5%.
Operating earnings for the second quarter were $5.9 million, up from $5.5 million in 2006. Operating earnings as a percent of net sales remained flat at 12.2%.
“We are very pleased with our overall second quarter results,” stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group. “Our Florsheim and Nunn Bush brands both had very good results and we had a very strong performance in our retail division.”
Weyco Group will host a conference call on Friday, July 27, 2007, at 11:00 a.m. Eastern Time to discuss the second quarter financial results in more detail. To participate in the call please dial 866-713-8307 or 617-597-5307, referencing passcode #38531002, 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 #42809660. Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group’s website at 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 small number of retail stores in the United States 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. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
For the three and six months ended June 30, 2007 and 2006Three Months ended June 30 Six Months ended June 30
2007 2006 2007 2006NET SALES $48,370,810 $45,111,438 $112,228,867 $104,399,649
COST OF SALES 29,677,190 27,651,564 70,484,108 65,906,885
Gross earnings 18,693,620 17,459,874 41,744,759 38,492,764SELLING AND
ADMINISTRATIVE
EXPENSES 12,786,598 11,975,701 27,159,425 24,802,329
Earnings from
operations 5,907,022 5,484,173 14,585,334 13,690,435INTEREST INCOME 554,738 517,849 1,062,304 979,708
INTEREST EXPENSE (85,109) (118,472) (208,144) (297,294)
OTHER INCOME
(EXPENSE), net 2,465 8,742 4,246 3,472
Earnings before
provision for
income taxes 6,379,116 5,892,292 15,443,740 14,376,321PROVISION FOR
INCOME TAXES 2,330,000 2,250,000 5,700,000 5,425,000Net earnings $4,049,116 $3,642,292 $9,743,740 $8,951,321
WEIGHTED AVERAGE
SHARES OUTSTANDING
Basic 11,566,388 11,612,051 11,614,816 11,596,254
Diluted 12,015,212 12,054,041 12,067,695 12,032,359EARNINGS PER SHARE
Basic $.35 $.31 $.84 $.77
Diluted $.34 $.30 $.81 $.74CASH DIVIDENDS
PER SHARE $.11 $.09 $.20 $.16CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
June 30 December 31
2007 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $18,194,616 $15,314,140
Marketable securities, at amortized cost 2,635,225 1,600,871
Accounts receivable, net 27,972,690 30,641,632
Accrued income tax receivable 869,514 —
Inventories 39,761,617 51,000,849
Deferred income tax benefits 745,681 949,109
Prepaid expenses and other current assets 1,303,632 1,715,859
Total current assets 91,482,975 101,222,460
MARKETABLE SECURITIES, at amortized cost 42,071,175 40,361,296
OTHER ASSETS 8,975,148 8,725,346
PLANT AND EQUIPMENT, net 28,384,963 28,445,900
TRADEMARK 10,867,969 10,867,969
$181,782,230 $189,622,971LIABILITIES & SHAREHOLDERS’ INVESTMENT
CURRENT LIABILITIES:
Short-term borrowings $5,552,381 $10,957,518
Accounts payable 7,136,861 12,398,740
Dividend payable 1,276,442 1,054,354
Accrued liabilities 8,562,366 8,430,267
Accrued income taxes — 72,907
Total current liabilities 22,528,050 32,913,786
LONG-TERM PENSION LIABILITY 6,883,315 6,620,842
DEFERRED INCOME TAX LIABILITIES 1,651,854 1,915,869
SHAREHOLDERS’ INVESTMENT:
Common stock 11,366,952 9,129,256
Class B common stock 209,158 2,585,087
Capital in excess of par value 9,866,309 7,576,096
Reinvested earnings 134,715,775 134,264,076
Accumulated other comprehensive loss (5,439,183) (5,382,041)
Total shareholders investment 150,719,011 148,172,474
$181,782,230 $189,622,971CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the six months ended June 30, 2007 and 20062007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $9,743,740 $8,951,321
Adjustments to reconcile net earnings
to net cash provided by operating
activities –
Depreciation 1,237,342 1,077,279
Amortization 42,453 34,164
Deferred income taxes (179,587) (131,053)
Stock-based compensation 148,394 —
Pension expense 670,338 596,502
Loss (Gain) on sale of assets — 13
Increase in cash surrender value of
life insurance (259,260) (251,070)
Changes in operating assets and liabilities –
Accounts receivable 2,668,942 1,760,135
Inventories 11,239,232 924,141
Prepaids and other current assets 421,685 507,841
Accounts payable (5,261,879) (5,625,300)
Accrued liabilities and other (231,058) 384,361
Accrued income taxes (915,421) (2,233,078)
Net cash provided by operating
activities 19,324,921 5,995,256CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (2,962,712) (14,795,896)
Proceeds from maturities of marketable
securities 176,026 1,106,072
Purchase of plant and equipment (1,221,255) (1,219,386)
Proceeds from sales of plant and
equipment 62,000 996
Net cash used for investing activities (3,945,941) (14,908,214)CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid (2,108,429) (1,620,493)
Shares purchased and retired (7,271,213) (1,875,593)
Proceeds from stock options exercised 1,390,242 1,195,489
Repayments under revolving credit
agreement (5,405,137) (34,428)
Income tax benefit from the exercise of
stock options 896,033 856,848
Net cash used for financing activities (12,498,504) (1,478,177)Net increase (decrease) in cash and
cash equivalents 2,880,476 (10,391,135)CASH AND CASH EQUIVALENTS at beginning
of period $15,314,140 $22,780,913CASH AND CASH EQUIVALENTS at end of period $18,194,616 $12,389,778
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net of refunds $5,798,138 $6,546,302
Interest paid $241,331 $289,612
First Call Analyst:
FCMN Contact:
Source: Weyco Group, Inc.
