Weyco Reports Fourth Quarter And Full Year 2012 Results

MILWAUKEE, Feb. 28, 2013 /PRNewswire/ -- Weyco Group, Inc. (NASDAQ: WEYS) (the "Company") today announced financial results for the quarter and year ended December 31, 2012.

FOURTH QUARTER

Net sales for the fourth quarter were $78.4 million, an increase of 5% from 2011 sales of $74.8 million.  Operating earnings for the fourth quarter of 2012 increased 39% to $12.5 million, from $8.9 million in 2011. Net earnings attributable to the Company were $7.7 million, compared to $5.5 million in 2011. Diluted earnings per share increased to $0.71 per share in 2012, from $0.50 per share in the fourth quarter of 2011. Earnings for the quarter included $1.8 million ($1.1 million after tax, or $0.10 per diluted share) of income resulting from a reduction in the liability for  future payments to be made as a result of the 2011 acquisition of The Combs Company ("Bogs").

Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $56.6 million for the fourth quarter of 2012, compared with $55.0 million in 2011.  Wholesale product sales were $55.4 million in the fourth quarter of 2012, up from $53.8 million in 2011. Wholesale net sales of the Company's Stacy Adams and Florsheim brands were each up 9% for the quarter, while Nunn Bush sales remained flat.  Wholesale net sales of the Company's BOGS and Rafters brands collectively decreased 7% for the quarter.  The decrease in the BOGS and Rafters business was primarily due to lower fourth quarter 2012 sales of the BOGS brand in the U.S. due to the mild winter.  The decrease in BOGS U.S. business was partially offset by $2.5 million of BOGS net sales in Canada in the fourth quarter 2012, following the Company's June 1, 2012 takeover of the Canadian distribution of the BOGS and Rafters brands from a third party licensee.  Licensing revenues were $1.2 million in the fourth quarter of 2012 and 2011. Operating earnings for the wholesale segment were $9.1 million in the fourth quarter of 2012 compared to $6.0 million in 2011.

Net sales in the North American retail segment, which include sales from the Company's Florsheim retail stores in the U.S. and its Internet business, were $7.6 million in the fourth quarter of 2012, compared with $7.5 million in 2011, an increase of 1%.  Same store sales were up 8% for the quarter. There were seven fewer domestic retail stores as of December 31, 2012 compared to 2011.  Operating earnings for the segment were $1.3 million in the fourth quarter of 2012 compared to $1.2 million in 2011.

Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $14.1 million in the fourth quarter of 2012, compared to $12.3 million in 2011.  The majority of other net sales were generated by Florsheim Australia.  Florsheim Australia's net sales were up 15% or $1.7 million.  Collectively, the operating earnings of the Company's other businesses were $2.1 million in the fourth quarter of 2012 compared to $1.7 million in the same period last year.  

FULL YEAR 2012

Overall net sales in 2012 were $293.5 million, an increase of 8% from 2011 sales of $271.1 million. Operating earnings increased 28% to $29.8 million in 2012, from $23.2 million in 2011.  Net earnings attributable to the Company were $19.0 million in 2012, compared to $15.3 million in 2011.  Diluted earnings per share increased to $1.73 per share in 2012, from $1.37 per share in the prior year.  Earnings for the year included $3.4 million ($2.1 million after tax, or $0.19 per share) of income resulting from a reduction in the liability for future payments to be made as a result of the 2011 acquisition of Bogs.

In the North American wholesale segment, net sales were $217.9 million in 2012 compared with $199.1 million in 2011. Wholesale product sales were $214.6 million in 2011, up 10% from $195.7 million in 2011. Net sales of the BOGS and Rafters brands were $36 million in 2012 compared to $28 million in 2011.  The Company's 2012 results included Bogs operations for the full year, while 2011 only included Bogs operations from the March 2, 2011 acquisition date through December 31, 2011.  In addition, Bogs had $6.9 million of sales in Canada in 2012, following the Company's June 1, 2012 takeover of the distribution of the BOGS and Rafters brands in Canada. Wholesale net sales of Stacy Adams, Nunn Bush and Florsheim were up 10%, 1%, and 8%, respectively, for the year.  Licensing revenues were $3.3 million in 2012 compared to $3.4 million in 2011. The operating earnings of the wholesale segment were up $6.6 million, or 42%, for the year.

In the retail segment, net sales were $24.3 million, down 2% from $24.7 million in 2011.  There were seven fewer stores at the end of 2012 compared to 2011.  Same store sales were up 8%.  The retail division's operating earnings were $1.7 million in 2012 compared to $1.6 million in 2011 due to an improvement in same store performance as well as the closing of underperforming stores during the year.

The Company's other businesses had net sales of $51.2 million in 2012 compared to $47.3 million in 2011.  The majority of the increase was at Florsheim Australia, whose net sales increased $4.7 million, or 12%.  Collectively, the operating earnings of the Company's other businesses were $5.9 million in 2012 compared to $6.0 million in 2011.

"We are pleased to announce that we had sales growth across all of our wholesale brands in North America and internationally during 2012," stated Tom Florsheim, Jr., Chairman and CEO of Weyco Group, Inc. "We feel that our brands are well-positioned in their respective markets for future growth."

Weyco Group will host a conference call on March 1, 2013 at 11:00 a.m. Eastern Time to discuss the fourth quarter and full year 2012 financial results in more detail.  To participate in the call please dial 888-713-4211 or 617-213-4864, referencing passcode 33795724, 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 71041856.  Alternatively, the conference call and replay will be available by visiting the investor relations section of Weyco Group's website at www.weycogroup.com.

On December 31, 2012, the Company paid two quarterly cash dividends.  The Company accelerated the timing of its first quarter 2013 dividend of $0.17 per share which was payable to all shareholders of record on December 3, 2012.  The Company also accelerated the timing of its second quarter 2013 dividend of $0.17 per share which was payable to all shareholders of record on December 21, 2012. Both dividends were accelerated into the fourth quarter in anticipation of potential tax law changes effective January 1, 2013.  The Company plans to resume its regular quarterly dividend payment schedule in July 2013.

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 TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011 (UNAUDITED)












Three Months Ended December 31, 


Twelve Months Ended December 31,



2012


2011


2012


2011



(In thousands, except per share amounts)










Net sales

$  78,351


$   74,803


$   293,471


$  271,100

Cost of sales

44,819


44,109


178,584


164,378

Gross earnings

33,532


30,694


114,887


106,722










Selling and administrative expenses

21,078


21,756


85,090


83,525

Earnings from operations

12,454


8,938


29,797


23,197










Interest income 

436


501


1,840


2,220

Interest expense

(173)


(260)


(561)


(611)

Other income and (expense), net

(89)


170


(144)


216










Earnings before provision for income taxes

12,628


9,349


30,932


25,022










Provision for income taxes

4,288


3,247


10,533


8,581










Net earnings

8,340


6,102


20,399


16,441










Net earnings attributable to noncontrolling interest

663


569


1,442


1,190










Net earnings attributable to Weyco Group, Inc.

$    7,677


$     5,533


$     18,957


$    15,251










Weighted average shares outstanding









Basic

10,797


10,881


10,844


11,066


Diluted

10,878


11,016


10,950


11,159










Earnings per share









Basic

$      0.71


$       0.51


$         1.75


$        1.38


Diluted

$      0.71


$       0.50


$         1.73


$        1.37










Cash dividends declared (per share)

$      0.34


$       0.16


$         0.84


$        0.64

 

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)








December 31,


December 31, 



2012


2011



(Dollars in thousands)

ASSETS:

Cash and cash equivalents


$             17,288


$             10,329

Marketable securities, at amortized cost


8,004


4,745

Accounts receivable, net


49,048


43,636

Accrued income tax receivable


1,136


816

Inventories


65,366


62,689

Deferred income tax benefits


649


395

Prepaid expenses and other current assets


4,953


5,613

     Total current assets


146,444


128,223






Marketable securities, at amortized cost


36,216


46,839

Deferred income tax benefits


792


3,428

Property, plant and equipment, net


37,218


31,077

Goodwill


11,112


11,112

Trademarks


34,748


34,748

Other assets


18,791


18,081

     Total assets


$           285,321


$           273,508






LIABILITIES AND EQUITY:





Short-term borrowings


$             45,000


$             37,000

Accounts payable


11,133


12,936

Dividend payable


-


1,742

Accrued liabilities


13,888


13,217

     Total current liabilities


70,021


64,895






Long-term pension liability


27,530


26,344

Other long-term liabilities


6,381


10,879






Common stock


10,831


10,922

Capital in excess of par value


26,184


22,222

Reinvested earnings


149,664


146,266

Accumulated other comprehensive loss


(12,514)


(13,419)

     Total Weyco Group, Inc. equity


174,165


165,991

Noncontrolling interest


7,224


5,399

     Total equity


181,389


171,390

     Total liabilities and equity


$           285,321


$           273,508

 

 

 

WEYCO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)





Twelve Months Ended December 31,




2012


2011




(Dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:





Net earnings

$  20,399


$ 16,441


Adjustments to reconcile net earnings to net cash





 provided by operating activities - 






Depreciation

3,338


2,591



Amortization

305


253



Bad debt expense

175


316



Deferred income taxes

1,648


(343)



Net gains on remeasurement of contingent consideration

(3,522)


(206)



Net foreign currency transaction losses

138


197



Stock-based compensation

1,201


1,224



Pension contribution

-


(1,600)



Pension expense

3,407


2,836



Net gains on sale of marketable securities

-


(346)



Net losses (gains) on disposal of property, plant and equipment

63


(14)



Impairment of property, plant and equipment

93


165



Increase in cash surrender value of life insurance

(535)


(527)


Changes in operating assets and liabilities, net of effects from acquisitions - 






Accounts receivable

(5,586)


(1,267)



Inventories

(2,676)


(3,667)



Prepaids and other assets

368


(752)



Accounts payable

(1,802)


2,141



Accrued liabilities and other

1,293


633



Accrued income taxes

(320)


(932)



    Net cash provided by operating activities

17,987


17,143







CASH FLOWS FROM INVESTING ACTIVITIES:





Acquisition of businesses, net of cash acquired

-


(27,023)


Purchase of marketable securities

(10)


(1,179)


Proceeds from maturities and sales of marketable securities

7,342


12,963


Proceeds from the sale of property, plant and equipment

-


14


Life insurance premiums paid

(155)


(155)


Purchase of property, plant and equipment

(9,540)


(8,189)



     Net cash used for investing activities

(2,363)


(23,569)







CASH FLOWS FROM FINANCING ACTIVITIES:





Cash dividends paid

(10,875)


(7,155)


Cash dividends paid to noncontrolling interest of subsidiary

(233)


-


Shares purchased and retired

(6,558)


(13,021)


Proceeds from stock options exercised

2,300


1,096


Payment of indemnification holdback

(2,000)


-


Repayment of debt assumed in acquisition

-


(3,814)


Net repayments of commercial paper

-


(5,000)


Proceeds from bank borrowings

33,000


73,000


Repayments of bank borrowings

(25,000)


(36,000)


Income tax benefits from stock-based compensation

655


496



     Net cash (used for) provided by financing activities

(8,711)


9,602








Effect of exchange rate changes on cash and cash equivalents

46


3








Net increase in cash and cash equivalents

$    6,959


$   3,179







CASH AND CASH EQUIVALENTS at beginning of year

10,329


7,150







CASH AND CASH EQUIVALENTS at end of year

$  17,288


$ 10,329







SUPPLEMENTAL CASH FLOW INFORMATION:





Income taxes paid, net of refunds

$    8,946


$   7,989


Interest paid

$       442


$      457

 

SOURCE Weyco Group, Inc.



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