• Weyco Reports Fourth Quarter and Full Year 2020 Results

    المصدر: Nasdaq GlobeNewswire / 09 مارس 2021 16:05:01   America/New_York

    Milwaukee, WI, March 09, 2021 (GLOBE NEWSWIRE) -- Weyco Group, Inc. (NASDAQ:WEYS) (the “Company”) today announced financial results for the quarter and year ended December 31, 2020.

    Fourth Quarter 2020
    Net sales were $62.0 million compared to fourth quarter 2019 net sales of $86.9 million. Earnings from operations totaled $7.9 million compared to $11.5 million in the fourth quarter of 2019. Net earnings totaled $5.1 million compared to $8.8 million in last year’s fourth quarter. Diluted earnings per share were $0.52 per share versus $0.90 per share in the fourth quarter of 2019.

    Net sales in the North American wholesale segment, which include North American wholesale sales and licensing revenues, were $46.2 million compared to $68.8 million in the fourth quarter of 2019. Earnings from operations for the wholesale segment were $5.6 million compared to $10.9 million in last year’s fourth quarter. Sales volumes were down across our three men’s legacy brands due to the slow retail environment resulting from the ongoing pandemic, but our BOGS outdoor brand increased 5% for the quarter, as consumers continue to spend more time outdoors. Our cost-cutting measures, mainly in employee and advertising costs, helped us to generate solid earnings in the fourth quarter despite the reduction in sales.

    Net sales in the North American retail segment, which include sales from the Company’s e-commerce businesses and brick and mortar stores in the United States, were $8.7 million compared to $9.1 million in last year’s fourth quarter. Retail earnings from operations totaled $2.7 million for the quarter, up from $1.5 million last year. Retail sales decreased due to the closing of three unprofitable stores in the third quarter of 2020, as well as reduced foot traffic in our existing stores, as compared to last year, resulting from the pandemic. This decrease was offset by a 15% increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Retail operating earnings increased due to the benefit of closing unprofitable stores and higher operating earnings from our websites.

    Other net sales, which include the wholesale and retail net sales of Florsheim Australia and Florsheim Europe, were $7.1 million compared to $9.0 million in the fourth quarter of 2019, and also decreased as a result of the pandemic. Collectively, Florsheim Australia and Florsheim Europe had a combined loss from operations totaling $393,000 compared to a loss from operations of $854,000 in last year’s fourth quarter.

    Full Year 2020

    • Overall net sales for 2020 were $195.4 million compared to $304.0 million in 2019.

    • Loss from operations totaled $7.6 million in 2020 compared to earnings from operations of $27.0 million in 2019. Adjusted earnings from operations were $4.3 million in 2020.

    • Net loss totaled $8.5 million, or $(0.87) per diluted share, in 2020 compared to net earnings of $20.9 million, or $2.10 per diluted share, in 2019. Adjusted net earnings were $3.2 million, or $0.32 per diluted share, in 2020.

    Amounts referred to as “adjusted” are Non-GAAP and exclude certain items that were recognized by the Company primarily in the second and third quarters of 2020. These items are described more fully under “Non-GAAP Adjustments” below and “Reconciliations of Non-GAAP Financial Measures” accompanying this release.

    Full Year 2020 Segment Results

    North American Wholesale Segment
    Net sales were $152.2 million in 2020 compared to $242.1 million in 2019. Net sales of the Stacy Adams, Florsheim, and Nunn Bush brands were down significantly as compared to last year due to the effects of the pandemic. BOGS net sales were down slightly for the year, though business improved as the year went on as consumers spent more time outside. Licensing revenues were $1.2 million in 2020 and $3.0 million in 2019, down in line with reductions in licensees’ sales of branded products. Gross earnings as a percent of net sales were 35.5% in 2020 versus 36.6% in 2019. The decrease in gross margins was largely due to additional costs related to the tariff on certain footwear imported from China, and higher overseas freight costs. Earnings from operations were $975,000 in 2020 compared to $27.8 million in 2019. Adjusted earnings from operations were $5.8 million in 2020.

    North American Retail Segment
    Net sales were $21.5 million in 2020 and $25.2 million in 2019. The decrease was due to fewer stores in 2020 as a result of the closure of unprofitable stores, and a significant decline in brick-and-mortar same store sales due to the pandemic. This decrease was partially offset by a 9% increase in e-commerce sales, due to consumers turning to online shopping in the COVID-19 environment. Loss from operations totaled $1.1 million in 2020 compared to earnings from operations of $2.8 million in 2019. Adjusted earnings from operations totaled $1.5 million for 2020.

    Other
    The Company’s other businesses had combined net sales of $21.7 million in 2020 compared to $36.7 million in 2019. The decrease was due to lower net sales at both Florsheim Australia and Florsheim Europe, as a result of the pandemic. Collectively, Florsheim Australia and Florshiem Europe had a combined loss from operations totaling $7.5 million in 2020 compared to a loss from operations of $3.5 million last year. In late 2020, we decided to close Florsheim Europe, which includes a small wholesale business and two retail stores. Total sales at Florsheim Europe were $2.6 million in 2020. The Company incurred approximately $1.6 million of costs in 2020 related to the closing of Florsheim Europe; these costs are included in the non-GAAP adjustments noted below. Adjusted loss from operations for the Company’s other operations was $3.1 million in 2020.

    “We are pleased to report that, despite the challenging business environment brought on by COVID-19, Weyco Group returned to profitability in the fourth quarter,” stated Thomas W. Florsheim, Jr., the Company’s Chairman and CEO. “We are encouraged by these results as they demonstrate that the strategic decisions and cost-cutting measures we took in 2020 enabled us to be profitable at diminished sales volume. As we look ahead to 2021, we believe that at least the first half of the year will continue to be impacted by the pandemic, but with the rollout of vaccines, we are hoping to see an improved retail environment and consequently, higher sales, in the second half of the year. With our new leaner operations, coupled with our strong balance sheet, we believe we are well-positioned for growth and profitability as conditions improve.”

    On March 9, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.24 per share to all shareholders of record on March 19, 2021, payable March 31, 2021.

    Non-GAAP Adjustments
    Amounts referred to as “adjusted” exclude the following items that were recognized by the Company in 2020, primarily in the second and third quarters of 2020:

    • $5.9 million pre-tax expense from employee costs related to restructuring and temporary closures
    • $4.3 million pre-tax expense from two large customer receivable write-offs due to bankruptcies filed during the pandemic
    • $3.1 million pre-tax expense for the impairment of retail store fixed assets and operating lease right-of-use assets
    • $2.0 million pre-tax expense from reserves for obsolete and slow-moving inventory due to COVID-19-related impacts
    • $1.5 million pre-tax expense from early lease termination charges
    • $0.5 million pre-tax expense from other related charges
    • $5.4 million pre-tax income from government wage and rent subsidies
    • $2.0 million tax expense related to deferred tax assets of the Company’s foreign subsidiaries

    Reconciliations of amounts on a GAAP basis to the “adjusted” amounts are provided in the “Reconciliations of Non-GAAP Financial Measures” at the end of this release.

    Use of Non-GAAP Financial Measures
    In addition to GAAP financial measures, the Company presents the following non-GAAP financial measures: “adjusted earnings (loss) from operations,” “adjusted net earnings,” and “adjusted diluted earnings per share.” Adjusted results exclude the impact of items that management of the Company believes affect the comparability of its consolidated financial statements in the periods presented. The Company believes that these non-GAAP measures are useful to investors and other users of its consolidated financial statements as an additional tool for evaluating operating performance. The Company believes they also provide a useful baseline for analyzing trends in its operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. See “Reconciliations of Non-GAAP Financial Measures” accompanying this press release.

    Conference Call Details
    Weyco Group, Inc. will host a conference call on March 10, 2021, at 11:00 a.m. Eastern Time to discuss the fourth quarter and full year 2020 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: http://www.directeventreg.com/registration/event/2574419. 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/or8xra84. A recording of 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 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. With respect to the COVID-19 pandemic, numerous factors will determine the extent and length of the impact on the Company, including the extent and duration of the pandemic and its impact on the global economy; actions taken by governments, such as stay-at-home and similar orders that, among other effects, require retail store closures or limit foot traffic; the financial health of the Company’s customers and business partners, including the effects of any bankruptcy proceedings by such parties; the performance/resiliency of the Company’s supply chain; and the health and welfare of the Company’s employees. Weyco Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

    For more information, contact:

    John Wittkowske
    Senior Vice President and Chief Financial Officer
    414-908-1880

     
     
    WEYCO GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
            
            
     Three Months Ended December 31,  Twelve Months Ended December 31,
      2020  2019  2020  2019
            
     (In thousands, except per share amounts)
            
    Net sales$61,967  $86,905  $195,375  $304,011 
    Cost of sales 34,414   48,416   116,817   180,049 
    Gross earnings 27,553   38,489   78,558   123,962 
            
    Selling and administrative expenses 19,639   26,948   86,156   96,922 
    Earnings (loss) from operations 7,914   11,541   (7,598)  27,040 
            
    Interest income 119   160   527   823 
    Interest expense (20)  (82)  (79)  (244)
    Other income (expense), net (51)  (293)  96   (535)
            
    Earnings (loss) before provision for income taxes 7,962   11,326   (7,054)  27,084 
            
    Provision for income taxes 2,857   2,511   1,431   6,202 
            
    Net earnings (loss)$5,105  $8,815  $(8,485) $20,882 
            
    Weighted average shares outstanding       
    Basic 9,749   9,820   9,758   9,904 
    Diluted 9,749   9,824   9,758   9,953 
            
    Earnings (loss) per share       
    Basic$0.52  $0.90  $(0.87) $2.11 
    Diluted$0.52  $0.90  $(0.87) $2.10 
            
    Cash dividends declared (per share)$0.24  $0.24  $0.96  $0.95 
            
            
    Comprehensive income (loss)$1,429  $5,985  $(11,954) $17,918 
            


    WEYCO GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
        
        
     December 31, December 31,
      2020  2019
        
     (Dollars in thousands)
    ASSETS:
    Cash and cash equivalents$32,476  $9,799 
    Marketable securities, at amortized cost 2,215   5,904 
    Accounts receivable, net 34,631   51,532 
    Income tax receivable 1,374   - 
    Inventories 59,025   86,713 
    Prepaid expenses and other current assets 4,610   6,047 
    Total current assets 134,331   159,995 
        
    Marketable securities, at amortized cost 12,800   15,814 
    Deferred income tax benefits 1,235   2,487 
    Property, plant and equipment, net 30,759   32,214 
    Operating lease right-of-use assets 9,613   18,753 
    Goodwill 11,112   11,112 
    Trademarks 32,868   32,868 
    Other assets 24,001   23,674 
    Total assets$256,719  $296,917 
        
    LIABILITIES AND EQUITY:   
    Short-term borrowings$-  $7,049 
    Accounts payable 8,444   12,455 
    Dividend payable -   2,355 
    Operating lease liabilities 4,245   6,505 
    Accrued liabilities 11,656   13,422 
    Accrued income tax payable -   90 
    Total current liabilities 24,345   41,876 
        
    Deferred income tax liabilities 2,914   3,085 
    Long-term pension liability 33,534   27,523 
    Operating lease liabilities 7,734   14,110 
    Other long-term liabilities 267   329 
    Total liabilities 68,794   86,923 
        
    Common stock 9,797   9,873 
    Capital in excess of par value 67,178   65,832 
    Reinvested earnings 138,955   158,825 
    Accumulated other comprehensive loss (28,005)  (24,536)
    Total equity 187,925   209,994 
    Total liabilities and equity$256,719  $296,917 
        


    WEYCO GROUP, INC. AND SUBSIDIARIES
    CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
        
        
     Twelve Months Ended December 31,
      2020  2019
        
     (Dollars in thousands)
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net earnings (loss)$(8,485) $20,882 
    Adjustments to reconcile net earnings (loss) to net cash provided by operating activities -   
    Depreciation 2,901   3,292 
    Amortization 316   194 
    Bad debt expense 5,289   122 
    Deferred income taxes 2,755   (869)
    Net foreign currency transaction losses (gains) 98   (13)
    Share-based compensation expense 1,377   1,452 
    Pension expense 397   1,047 
    Impairment of long-lived assets 3,055   259 
    Loss on disposal of fixed assets 111   330 
    Increase in cash surrender value of life insurance (611)  (564)
    Changes in operating assets and liabilities -   
    Accounts receivable 11,397   (138)
    Inventories 27,520   (14,042)
    Prepaid expenses and other assets 1,281   (623)
    Accounts payable (4,149)  (315)
    Accrued liabilities and other (1,773)  (817)
    Accrued income taxes (1,498)  (810)
    Net cash provided by operating activities 39,981   9,387 
        
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Purchases of marketable securities -   (14,641)
    Proceeds from maturities of marketable securities 6,680   13,250 
    Life insurance premiums paid (155)  (155)
    Purchases of property, plant and equipment (3,368)  (7,392)
    Net cash provided by (used for) investing activities 3,157   (8,938)
        
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Cash dividends paid (11,776)  (9,408)
    Shares purchased and retired (2,063)  (5,649)
    Net proceeds from stock options exercised -   161 
    Taxes paid related to the net share settlement of equity awards -   (5)
    Proceeds from bank borrowings 33,947   151,358 
    Repayments of bank borrowings (40,996)  (150,149)
    Net cash used for financing activities (20,888)  (13,692)
        
    Effect of exchange rate changes on cash and cash equivalents 427   69 
        
    Net increase (decrease) in cash and cash equivalents$22,677  $(13,174)
        
    CASH AND CASH EQUIVALENTS at beginning of year 9,799   22,973 
        
    CASH AND CASH EQUIVALENTS at end of year$32,476  $9,799 
        
    SUPPLEMENTAL CASH FLOW INFORMATION:   
    Income taxes paid, net of refunds$914  $7,604 
    Interest paid$72  $244 
        

    Reconciliations of Non-GAAP Financial Measures
    The following table contains a reconciliation of GAAP Financial Measures to the Non-GAAP Financial Measures used by the Company in the discussion of its consolidated financial results for the year ended December 31, 2020. The adjustments discussed below were recognized by the Company primarily in the second and third quarters of 2020. Adjustments made in the fourth quarter of 2020 did not have a material impact on the Company’s consolidated financial statements.

      Twelve Months Ended December 31, 2020 
      GAAP   Non-GAAP 
      Measures   Measures 
      (As Reported) Adjustments (As Adjusted) 
            
      (In thousands, except per share amounts) 
            
     Earnings (loss) from operations$(7,598) $11,859 (1)$4,261  
            
     Net earnings (loss)$(8,485) $11,640 (2)$3,155  
            
     Diluted earnings (loss) per share$(0.87) $1.19 (3)$0.32  

    

    (1)Includes $5.9 million in employee costs related to restructuring and temporary closures, $4.3 million from two large customer receivable write-offs due to bankruptcies filed during the pandemic, $3.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $2.0 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, $1.5 million in early lease termination charges, and $0.5 million in other related charges, partially offset by $5.4 million of income from government wage and rent subsidies.
      
    (2)Reflects the after-tax impact of the above-noted adjustments of $9.6 million and $2.0 million of tax expense related to deferred tax assets of the Company’s foreign subsidiaries.
      
    (3)Reflects the per diluted share impact of the above-noted adjustments.
      

    The following is a reconciliation of GAAP Financial Measures to the Non-GAAP Financial Measures used by the Company in the discussion of its segment financial results for the year ended December 31, 2020. The adjustments discussed below were recognized by the Company primarily in the second and third quarters of 2020. Adjustments made in the fourth quarter of 2020 did not have a material impact on the Company’s consolidated financial statements.

      Twelve Months Ended December 31, 2020 
      GAAP   Non-GAAP 
      Measures   Measures 
      (As Reported) Adjustments (As Adjusted) 
            
      (Dollars in thousands) 
     Earnings (loss) from operations      
     Wholesale$975  $4,798 (1)$5,773  
     Retail (1,073)  2,611 (2) 1,538  
     Other (7,500)  4,450 (3) (3,050) 
     Total$(7,598) $11,859  $4,261  

    

    (1)Adjustment includes $2.0 million in employee costs related to restructuring and temporary closures, $4.3 million from two large customer receivable write-offs due to bankruptcies filed during the pandemic, and $0.2 million in other related charges, partially offset by $1.7 million of income from government wage subsidies.
      
    (2)Adjustment includes $0.3 million in employee costs related to restructuring and temporary closures, $1.0 million for the impairment of retail store fixed assets, and $1.5 million in early lease termination charges, partially offset by $0.2 million of income from government wage subsidies.
      
    (3)Adjustment includes $3.6 million in employee costs related to restructuring and temporary closures, $2.1 million for the impairment of retail store fixed assets and operating lease right-of-use assets, $2.0 million in reserves for obsolete and slow-moving inventory due to COVID-19-related impacts, and $0.3 million in related charges, partially offset by $3.5 million of income from government wage and rent subsidies.
      

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