Weyco Group, Inc. (WEYS)
Q1 2013 Earnings Call
May 3, 2013 11:00 a.m. ET
Tom Florsheim, Jr. – Chairman and CEO
John Florsheim – President, Chief Operating Officer and Assistant Secretary
John Wittkowske – SVP, CFO and Secretary
Previous Statements by WEYS
» Weyco Group Inc. Q4 2008 Earnings Call Transcript
» Weyco Group, Inc. Q3 2008 Earnings Call Transcript
» Weyco Group, Inc. Q2 2008 Earnings Call Transcript
» Weyco Group Inc Q1 2008 Earnings Call Transcript
Thank you. Good morning everyone and welcome to our Weyco Group’s conference call to discuss our first quarter 2013 earnings. On this call with me today are Tom Florsheim Jr., our Chairman and CEO and John Florsheim, our President and COO.
Before we begin to discuss the results for the quarter I will read a brief disclaimer. During the course of this call, we may make projections or other forward-looking statements regarding our current expectations concerning future events and the future financial performance of the company. We wish to caution you that such statements are just predictions and that actual event or results may differ materially.
We refer you to Weyco Group’s most recent Form 10-K, as filed with the Securities and Exchange Commission. This Form 10-K identifies important factors and risks that could cause the company’s actual results to differ materially from our projections. Additionally, some comparisons may refer to non-GAAP measures. Our SEC filings may contain additional information about these non-GAAP measures and why we use them.
Our net sales for the first quarter of 2013 were $73.6 million, compared to $75.3 million in 2012. Operating earnings were $4.7 million for the first quarter versus $5.8 million in 2012. Net earnings attributable to Weyco Group were $3.2 million, that’s compared to $3.9 million. Diluted earnings per share were $0.30 per share this year versus $0.35 per share in 2012.
Net earnings for the first quarter of 2012 included approximately $301,000, or $0.03 per diluted share of income resulting from an adjustment to reduce the estimated liability for future payments to be made as a result of the 2011 Bogs acquisition. No significant adjustment was made to the estimated liability in the first quarter of 2013.
North American wholesale sales of footwear for the first quarter of 2013 were $54.6 million compared to $55.9 million in 2012. Wholesale sales of our Stacy Adams, Florsheim and Bogs brands were up 2%, 3%, and 8% respectively, while sales of our Nunn Bush brand were down 11%. The increase in Bogs sales was due to additional business in Canada. We took over the distribution of Bogs in Canada from a third party licensee effective June 1, 2012. This increase was partially offset by a 9% decrease in Bogs net sales in the United States.
Licensing revenues were $594,000 in the first quarter compared to $725,000 last year. Operating earnings for the wholesale segment were $3.7 million compared to $4.5 million in the first quarter last year. Gross earnings as a percent of sales were 31% in 2013 compared with 30.5% in 2012.
Selling and administrative expenses were $13.4 million compared to $12.8 million last year. Excluding the 2012 adjustment related to the Bogs acquisition, our selling and administrative expenses would have been approximately flat between years and our operating earnings would have been down only $300,000 in 2013.
Net sales of our North American retail segment, which include both our internet sales and retail stores, were $5.7 million in both the first quarter of 2013 and 2012. Same store sales were up 10% for the quarter. There were six fewer retail stores at the end of the first quarter than they were at the same time last year. Retail operating earnings improved by $447,000 for the quarter due to higher same store sales and the closure of underperforming stores.
Our other operations, which include the wholesale and retail businesses of Florsheim Australia and Florsheim Europe had net sales of $12.6 million in the first quarter of 2013 versus $13.0 million in 2012. The majority of other net sales were generated by Florsheim Australia. Florsheim Australia's net sales were down 2%. Florsheim Australia's retail sales increased 9% with same store sales of 8% but the retail increase was more than offset by a 13% decrease in Florsheim Australia's wholesale business.
Operating earnings of our other businesses were $514,000 in the first quarter of this year compared with $1.4 million in the same period last year. Our cash and marketable securities were $55 million at March 31. We generated 3.7 million of cash from operations, $2.8 billion from the maturity of marketable securities and had $2.5 million of proceeds from stock option exercises. We spent $4.1 million on purchases of our company stock, repaid $7 million on our line of credit and had $564,000 of capital expenditures during the quarter.
On May 1, 2013, we purchased a 50% interest in a building in Montreal, Canada for $3.4 million. We previously leased this facility which currently serves as our Canadian office and distribution center. Including this purchase we estimate that 2013 capital expenditures will be between $5 million and $6 million.