Weyco Group Inc. Reports Operating Results (10-Q)
Weyco Group Inc. has a market cap of $271.1 million; its shares were traded at around $24.12 with a P/E ratio of 20.9 and P/S ratio of 1.3. The dividend yield of Weyco Group Inc. stocks is 2.7%. Weyco Group Inc. had an annual average earning growth of 4.9% over the past 10 years.WEYS is in the portfolios of Whitney Tilson of T2 Partners Management, LP, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Consolidated net sales for the third quarter of 2010 were $57.1 million, down 1% from last year s third quarter net sales of $57.9 million. Consolidated earnings from operations for this year s third quarter were $4.5 million, compared with $4.6 million last year.
North American wholesale segment earnings from operations in the quarter ended September 30, 2010 were $3.3 million, compared with $3.9 million in the same quarter last year. The decrease in this year s third quarter was due to lower licensing revenues and higher selling and administrative expenses. Year to date North American wholesale segment earnings from operations were $9.4 million this year compared with $9.2 million last year. The year to date increase resulted from higher gross margins this year somewhat offset by higher selling and administrative expenses and lower licensing revenues.
North American wholesale segment selling and administrative expenses include, and are primarily related to, distribution costs, salaries and commissions, advertising costs, employee benefit costs and depreciation. Wholesale selling and administrative expenses for the quarter ended September 30 were $9.8 million in 2010 and $9.3 million in 2009. Year to date wholesale selling and administrative expenses were $28.8 million in 2010 and $28.0 million in 2009. For the quarter, wholesale selling and administrative expenses as a percent of net sales were 23.8% this quarter compared with 22.3% in the same quarter last year. For the nine months ended September 30, wholesale selling and administrative expenses were 24.0% of net sales in 2010 and 22.8% of net sales in 2009. The percentage increase for both comparative periods reflects higher advertising and employee costs, which include additional costs this year associated with Umi.
For the quarter ended September 30, the Company had other income of $539,000 in 2010 and $373,000 in 2009. For the nine months ended September 30, 2010, the Company had other income of $321,000 compared with other income of $1.2 million last year. Included in the Company s other income and expense this year and last year were foreign currency transaction gains on intercompany loans denominated in U.S. dollars between the Company s U.S. business and Florsheim Australia. For the three months ended September 30, there were foreign currency transaction gains on these loans of $535,000 in 2010 and $357,000 in 2009. For the nine months ended September 30, there were foreign currency transaction gains of $318,000 in 2010 and $1.1 million in 2009.
The Company s primary source of liquidity is its cash and short-term marketable securities, which totaled $70.9 million at September 30, 2010 compared with $76.8 million at December 31, 2009. During the first nine months of 2010, the Company used $1.9 million in cash from operating activities compared with $17.9 million generated last year. The decrease was primarily due to changes in inventory levels in 2010 compared with 2009. The Company s inventory levels in 2010 are higher in comparison with last year as the Company lowered its inventory levels in 2009 when many major retailers reduced their inventory exposure in reaction to the slowdown in consumer demand. In 2010, the Company purchased $22.1 million of marketable securities using both current maturities and available cash. Capital expenditures were $1.1 million through September 30, 2010. The Company expects capital expenditures for 2010 to be less than $2.0 million.
The Company paid cash dividends of $5.2 million and $4.9 million during the nine months ended September 30, 2010 and 2009, respectively. On April 21, 2010, the Company s Board of Directors increased the quarterly dividend rate from $.15 per share to $.16 per share. This represents an increase of 7% in the quarterly dividend rate. The impact of this will be to increase cash dividends paid annually by approximately $450,000. The Company also used $2.6 million for the Umi acquisition on April 28, 2010.
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