UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________________ to _____________________________
Commission File Number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol |
| Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☐ | Non-Accelerated Filer ☐ | Smaller Reporting Company | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
As of April 24, 2023, there were
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following consolidated condensed balance sheet as of December 31, 2022, which has been derived from audited financial statements, and the unaudited interim consolidated condensed financial statements have been prepared by Weyco Group, Inc. (“we,” “our,” “us,” and the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. Please read these consolidated condensed financial statements in conjunction with the financial statements and notes thereto included in our latest annual report on Form 10-K.
1
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
March 31, | December 31, | |||||
| 2023 |
| 2022 | |||
(Dollars in thousands) | ||||||
ASSETS: |
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Cash and cash equivalents | $ | | $ | | ||
Investments, at fair value | | | ||||
Marketable securities, at amortized cost |
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Accounts receivable, net | | | ||||
Income tax receivable | — | | ||||
Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities, at amortized cost |
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Deferred income tax benefits |
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Property, plant and equipment, net |
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Operating lease right-of-use assets | | | ||||
Goodwill |
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Trademarks |
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Other assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY: |
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Short-term borrowings | $ | | $ | | ||
Accounts payable | | | ||||
Dividend payable |
| — |
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Operating lease liabilities | | | ||||
Accrued liabilities |
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Accrued income tax payable | | — | ||||
Total current liabilities |
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Deferred income tax liabilities |
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Long-term pension liability |
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Operating lease liabilities | | | ||||
Other long-term liabilities |
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Total liabilities |
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Common stock | | | ||||
Capital in excess of par value |
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Reinvested earnings |
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Accumulated other comprehensive loss |
| ( |
| ( | ||
Total equity |
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Total liabilities and equity | $ | | $ | |
The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.
3
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended March 31, | |||||||
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| 2023 |
| 2022 |
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(In thousands, except per share amounts) | |||||||
| |||||||
Net sales | $ | | $ | | |||
Cost of sales | |
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Gross earnings |
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Selling and administrative expenses |
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Earnings from operations |
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Interest income |
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Interest expense |
| ( |
| ( | |||
Other expense, net |
| ( |
| ( | |||
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Earnings before provision for income taxes |
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Provision for income taxes |
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Net earnings | | | |||||
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Weighted average shares outstanding |
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Basic |
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Diluted |
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Earnings per share |
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Basic | $ | | $ | | |||
Diluted | $ | | $ | | |||
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Cash dividends declared (per share) | $ | | $ | | |||
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Comprehensive income | $ | | $ | |
The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.
4
WEYCO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, | ||||||
| 2023 |
| 2022 | |||
(Dollars in thousands) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net earnings | $ | | $ | | ||
Adjustments to reconcile net earnings to net cash provided by operating activities - |
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Depreciation |
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Amortization |
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Bad debt (recovery) expense |
| ( |
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Deferred income taxes |
| ( |
| ( | ||
Net foreign currency transaction (gains) losses |
| ( |
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Share-based compensation expense |
| |
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Pension expense |
| |
| — | ||
Increase in cash surrender value of life insurance |
| ( |
| ( | ||
Changes in operating assets and liabilities - |
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Accounts receivable |
| |
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Inventories |
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Prepaid expenses and other assets |
| |
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Accounts payable |
| ( |
| ( | ||
Accrued liabilities and other |
| ( |
| ( | ||
Accrued income taxes |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from maturities of marketable securities |
| |
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Proceeds from sale of investment securities | — | | ||||
Purchases of property, plant and equipment |
| ( |
| ( | ||
Net cash (used for) provided by investing activities |
| ( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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| ||||
Cash dividends paid |
| ( |
| ( | ||
Shares purchased and retired |
| ( |
| ( | ||
Net proceeds from stock options exercised |
| |
| | ||
Payment of contingent consideration | ( | — | ||||
Proceeds from bank borrowings |
| |
| — | ||
Repayments of bank borrowings | ( | — | ||||
Net cash used for financing activities |
| ( |
| ( | ||
Effect of exchange rate changes on cash and cash equivalents |
| ( |
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Net increase in cash and cash equivalents | $ | | $ | | ||
CASH AND CASH EQUIVALENTS at beginning of period |
| | | |||
CASH AND CASH EQUIVALENTS at end of period | $ | | $ | | ||
SUPPLEMENTAL CASH FLOW INFORMATION: |
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Income taxes paid, net of refunds | $ | | $ | | ||
Interest paid | $ | | $ | |
The accompanying notes to consolidated condensed financial statements (unaudited) are an integral part of these financial statements.
5
NOTES:
1. Financial Statements
In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the three-month period ended March 31, 2023, may not necessarily be indicative of the results for the full year.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results specifically related to inventory reserves, realizability of deferred tax assets, goodwill and trademarks could materially differ from those estimates, which would impact the reported amounts and disclosures in the consolidated financial statements and accompanying notes.
2. New Accounting Pronouncement
Recently Adopted
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses: Measurements of Credit Losses on Financial Instruments. This ASU modifies the measurement of expected credit losses of certain financial instruments, based on historical experience, current conditions, and reasonable forecasts, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investments in leases, and trade accounts receivable as well as certain off-balance sheet credit exposures, such as loan commitments. The guidance must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to reinvested earnings in the period of adoption. We adopted this standard in first quarter of 2023. The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures.
3. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended March 31, | |||||||
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| 2023 | 2022 |
| |||
(In thousands, except per share amounts) | |||||||
Numerator: |
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Net earnings | $ | | $ | | |||
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Denominator: |
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Basic weighted average shares outstanding |
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| |
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Effect of dilutive securities: |
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Employee share-based awards |
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Diluted weighted average shares outstanding |
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| |
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Basic earnings per share | $ | | $ | | |||
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|
| |||||
Diluted earnings per share | $ | | $ | |
Diluted weighted average shares outstanding for the three months ended March 31, 2023 excludes anti-dilutive stock options totaling
6
4. Investments
Investments, at fair value
At both March 31, 2023 and December 31, 2022, we had $
Marketable securities, at amortized cost
We also invest in marketable securities. As noted in our Annual Report on Form 10-K for the year ended December 31, 2022, all of our marketable securities are classified as held-to-maturity securities and reported at amortized cost pursuant to ASC 320, Investments – Debt and Equity Securities, as we have the intent and ability to hold all investments to maturity.
Below is a summary of the amortized cost and estimated market values of the Company's marketable securities as of March 31, 2023 and December 31, 2022.
March 31, 2023 | December 31, 2022 | |||||||||||
| Amortized |
| Market |
| Amortized |
| Market | |||||
| Cost |
| Value |
| Cost |
| Value | |||||
(Dollars in thousands) | ||||||||||||
Marketable securities: |
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Current | $ | | $ | | $ | | $ | | ||||
Due from one through five years |
| |
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Due from six through ten years |
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Due from eleven through twenty years |
| |
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Total | $ | | $ | | $ | | $ | |
The unrealized gains and losses on marketable securities at March 31, 2023, and at December 31, 2022, were as follows:
March 31, 2023 | December 31, 2022 | |||||||||||
| Unrealized |
| Unrealized |
| Unrealized |
| Unrealized | |||||
| Gains |
| Losses |
| Gains |
| Losses | |||||
(Dollars in thousands) | ||||||||||||
Marketable securities | $ | | $ | ( | $ | | $ | ( |
The estimated market values provided are Level 2 valuations as defined by ASC 820. We reviewed our portfolio of investments as of March 31, 2023 and determined that no other-than-temporary market value impairment exists.
5. Intangible Assets
During the three months ended March 31, 2023, there were
|
| March 31, 2023 | December 31, 2022 | ||||||||||||||||||
Weighted | Gross | Gross | |||||||||||||||||||
Average | Carrying | Accumulated | Carrying | Accumulated | |||||||||||||||||
| Life (Years) |
| Amount |
| Amortization |
| Net |
| Amount |
| Amortization |
| Net | ||||||||
(Dollars in thousands) | (Dollars in thousands) | ||||||||||||||||||||
Amortizable intangible assets |
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Customer relationships |
| $ | | $ | ( | $ | | $ | | $ | ( | $ | | ||||||||
Total amortizable intangible assets | $ | | $ | ( | $ | | $ | | $ | ( | $ | |
Amortization expense related to the intangible assets was $
7
6. Segment Information
We have
Three Months Ended | ||||||||||||
March 31, |
| Wholesale |
| Retail |
| Other |
| Total | ||||
(Dollars in thousands) | ||||||||||||
2023 |
|
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| |||||
Product sales | $ | | $ | | $ | | $ | | ||||
Licensing revenues |
| |
| — |
| — |
| | ||||
Net sales | $ | | $ | | $ | | $ | | ||||
Earnings from operations | $ | | $ | | $ | | $ | | ||||
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2022 |
|
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Product sales | $ | | $ | | $ | | $ | | ||||
Licensing revenues |
| |
| — |
| — |
| | ||||
Net sales | $ | | $ | | $ | | $ | | ||||
Earnings (loss) from operations | $ | | $ | | $ | ( | $ | |
7. Employee Retirement Plans
The components of our pension expense were as follows:
Three Months Ended March 31, | ||||||
| 2023 |
| 2022 | |||
(Dollars in thousands) | ||||||
Service cost | $ | | $ | | ||
Interest cost |
| |
| | ||
Expected return on plan assets |
| ( |
| ( | ||
Net amortization and deferral |
| | | |||
Pension expense | $ | | $ | |
The components of pension expense other than the service cost component were included in “other expense, net” in the Consolidated Condensed Statements of Earnings and Comprehensive Income (Unaudited).
8. Leases
We lease retail shoe stores, as well as several office and distribution facilities worldwide. The leases have original lease periods expiring between 2023 and 2029. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The components of our operating lease costs were as follows:
| Three Months Ended March 31, | |||||
| 2023 |
| 2022 | |||
(Dollars in thousands) | ||||||
Operating lease costs |
| $ | | $ | | |
Variable lease costs (1) | | — | ||||
Total lease costs |
| $ | | $ | |
8
(1) Variable lease costs primarily include percentage rentals based upon sales in excess of specified amounts.
Short-term lease costs, which were excluded from the above table, are not material to our financial statements.
The following is a schedule of maturities of operating lease liabilities as of March 31, 2023:
|
| Operating Leases | |
(Dollars in thousands) | |||
2023, excluding the quarter ended March 31, 2023 |
| $ | |
2024 |
|
| |
2025 |
|
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2026 |
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| |
2027 |
|
| |
Thereafter |
|
| |
Total lease payments |
|
| |
Less imputed interest |
|
| ( |
Present value of lease liabilities |
| $ | |
The operating lease liabilities are classified in the consolidated condensed balance sheets (unaudited) as follows:
| March 31, 2023 |
| December 31, 2022 | |||
(Dollars in thousands) | ||||||
Operating lease liabilities - current | $ | | $ | | ||
Operating lease liabilities - non-current | | | ||||
Total |
| $ | | $ | |
We determined the present value of our lease liabilities using a weighted-average discount rate of
Supplemental cash flow information related to our operating leases is as follows:
| Three Months Ended March 31, | |||||
| 2023 |
| 2022 | |||
(Dollars in thousands) | ||||||
Cash paid for amounts included in the measurement of lease liabilities |
| $ | | $ | | |
Right-of-use assets obtained in exchange for new lease liabilities (noncash) | $ | | $ | |
9. Income Taxes
The effective income tax rates for the three months ended March 31, 2023 and 2022 were
10. Share-Based Compensation Plans
During the three months ended March 31, 2023, we recognized $
9
The following table summarizes our stock option activity for the three-month period ended March 31, 2023:
| Weighted | |||||||||
| Weighted | Average | ||||||||
| Average | Remaining | Aggregate | |||||||
| Exercise | Contractual | Intrinsic | |||||||
|
| Shares |
| Price |
| Term (Years) |
| Value* | ||
Outstanding at December 31, 2022 |
| | $ | |
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Granted |
| — | — |
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Exercised |
| ( | |
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Forfeited or expired |
| ( | |
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Outstanding at March 31, 2023 |
| | $ | |
| $ | | |||
Exercisable at March 31, 2023 |
| | $ | |
| $ | |
*The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of our Company’s common stock on March 31, 2023 of $
The following table summarizes our restricted stock award activity for the three-month period ended March 31, 2023:
Weighted | ||||||||||
Weighted | Average | |||||||||
Shares of | Average | Remaining | Aggregate | |||||||
Restricted | Grant Date | Contractual | Intrinsic | |||||||
| Stock |
| Fair Value |
| Term (Years) |
| Value* | |||
Non-vested at December 31, 2022 |
| | $ | |
|
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Issued |
| — | — |
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Vested |
| ( |
| |
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Forfeited |
| - |
| — |
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Non-vested at March 31, 2023 |
| | $ | |
| $ | |
*The aggregate intrinsic value of non-vested restricted stock was calculated using the market value of our Company’s common stock on March 31, 2023 of $
11. Short-Term Borrowings
At March 31, 2023, we had a $
12. Financial Instruments
At March 31, 2023, our wholly-owned subsidiary, Florsheim Australia, had foreign exchange contracts outstanding to buy $
We determine the fair value of foreign exchange contracts based on the difference between the foreign currency contract rates and the widely available foreign currency rates as of the measurement date. The fair value measurements are based on observable market transactions, and thus represent a Level 2 valuation as defined by ASC 820.
10
13. Comprehensive Income
Comprehensive income for the three months ended March 31, 2023 and 2022, was as follows:
Three Months Ended March 31, | ||||||
|
| 2023 |
| 2022 | ||
(Dollars in thousands) | ||||||
Net earnings | $ | | $ | | ||
Foreign currency translation adjustments |
| ( |
| | ||
Pension liability, net of tax of $ |
| |
| | ||
Total comprehensive income | $ | | $ | |
The components of accumulated other comprehensive loss as recorded in the Consolidated Condensed Balance Sheets (Unaudited) were as follows:
| March 31, |
| December 31, | |||
2023 | 2022 | |||||
(Dollars in thousands) | ||||||
Foreign currency translation adjustments | $ | ( | $ | ( | ||
Pension liability, net of tax |
| ( |
| ( | ||
Total accumulated other comprehensive loss | $ | ( | $ | ( |
The following tables show changes in accumulated other comprehensive loss during the three months ended March 31, 2023 and 2022:
| Foreign |
| Defined |
| |||||
Currency | Benefit | ||||||||
Translation | Pension | ||||||||
Adjustments | Items | Total | |||||||
Beginning balance, December 31, 2022 | $ | ( | $ | ( | $ | ( | |||
Other comprehensive loss before reclassifications | ( | | ( | ||||||
Amounts reclassified from accumulated other comprehensive loss | | | | ||||||
Net current period other comprehensive (loss) income | ( | | ( | ||||||
Ending balance, March 31, 2023 | $ | ( | $ | ( | $ | ( |
| Foreign |
| Defined |
| |||||
Currency | Benefit | ||||||||
Translation | Pension | ||||||||
Adjustments | Items | Total | |||||||
Beginning balance, December 31, 2021 | $ | ( | $ | ( | $ | ( | |||
Other comprehensive income before reclassifications | | | | ||||||
Amounts reclassified from accumulated other comprehensive loss | | | | ||||||
Net current period other comprehensive income |
| |
| |
| | |||
Ending balance, March 31, 2022 | $ | ( | $ | ( | $ | ( |
11
The following table shows reclassification adjustments out of accumulated other comprehensive loss during the three months ended March 31, 2023 and 2022:
Amounts reclassified from | ||||||||
accumulated other | ||||||||
comprehensive loss for | Affected line item in the | |||||||
the three months ended | statement where net income is | |||||||
| March 31, 2023 | March 31, 2022 |
| presented | ||||
Amortization of defined benefit pension items |
|
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|
| ||||
Prior service cost | $ | | $ | | (1) | Other expense, net | ||
Actuarial losses |
| | | (1) | Other expense, net | |||
Total before tax |
| | |
| ||||
Tax benefit |
| ( | ( |
| ||||
Net of tax | $ | | $ | |
|
(1) |
14. Equity
The following table reconciles our equity for the three months ended March 31, 2023:
Accumulated | ||||||||||||
Capital in | Other | |||||||||||
Common | Excess of | Reinvested | Comprehensive | |||||||||
| Stock |
| Par Value |
| Earnings |
| Loss | |||||
(Dollars in thousands) | ||||||||||||
Balance, December 31, 2022 | $ | | $ | | $ | | $ | ( | ||||
Net earnings |
| |
| |
| |
| — | ||||
Foreign currency translation adjustments |
| |
| |
| |
| ( | ||||
Pension liability adjustment, net of tax |
| |
| |
| |
| | ||||
Cash dividends declared |
| |
| |
| ( |
| — | ||||
Stock options exercised, net of shares withheld for employee taxes and strike price | | | | — | ||||||||
Share-based compensation expense | | | | — | ||||||||
Shares purchased and retired | ( | | ( | — | ||||||||
Balance, March 31, 2023 | $ | | $ | | $ | | $ | ( |
The following table reconciles our equity for the three months ended March 31, 2022:
| Accumulated | |||||||||||
| Capital in | Other | ||||||||||
| Common | Excess of | Reinvested | Comprehensive | ||||||||
|
| Stock |
| Par Value |
| Earnings |
| Loss | ||||
| (Dollars in thousands) | |||||||||||
Balance, December 31, 2021 | $ | | $ | | $ | | $ | ( | ||||
Net earnings |
| |
| |
| |
| | ||||
Foreign currency translation adjustments |
| |
| |
| |
| | ||||
Pension liability adjustment, net of tax |
| |
| |
| |
| | ||||
Cash dividends declared |
| |
| |
| ( |
| | ||||
Stock options exercised, net of shares withheld for employee taxes and strike price | | | | | ||||||||
Share-based compensation expense |
| | | | | |||||||
Shares purchased and retired | ( | | ( | | ||||||||
Balance, March 31, 2022 | $ | | $ | | $ | | $ | ( |
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements represent our good faith judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially. Such statements can be identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “likely,” “plans,” “predicts,” “projects,” “should,” “will,” or variations of such words, and similar expressions. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain. Therefore, the reader is cautioned that these forward-looking statements are subject to a number of risks, uncertainties or other factors that may cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risk factors described under Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2022, filed March 13, 2023. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
GENERAL
The Company 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, Rafters and Forsake. Inventory is purchased from third-party overseas manufacturers. Almost all of these foreign-sourced purchases are denominated in U.S. dollars.
We have two reportable segments, North American wholesale operations (“Wholesale”) and North American retail operations (“Retail”). In the Wholesale segment, our products are sold to leading footwear, department, and specialty stores, as well as e-commerce retailers, primarily in the United States and Canada. We also have licensing agreements with third parties who sell our branded apparel, accessories and specialty footwear in the United States, as well as our footwear in Mexico and certain markets overseas. Licensing revenues are included in our Wholesale segment. Our Retail segment consists of e-commerce businesses and four brick and mortar retail stores in the United States. Retail sales are made directly to consumers on our websites, or by our employees. Our “other” operations include our wholesale and retail businesses in Australia, South Africa, and Asia Pacific (collectively, “Florsheim Australia”). The majority of our operations are in the United States and our results are primarily affected by the economic conditions and retail environment in the United States.
EXECUTIVE OVERVIEW
We started the year 2023 strong, setting a first quarter sales record and generating robust record-level earnings in both our Wholesale and Retail segments.
Net sales of our Wholesale segment were up 4% for the quarter, led by our legacy business. Wholesale sales increased due to higher unit selling prices, while pairs shipped decreased 5%. Florsheim had another record quarter with a 15% increase, as the brand continues to pick up market share in the refined footwear category. Within the retail industry, Florsheim is seen as the go-to brand for on-trend dress footwear, and we continue to focus on expanding the brand into the hybrid and everyday casual market. Our Nunn Bush business was up slightly for the quarter with a 1% sales increase. Nunn Bush has made progress within the comfort casual segment, with over half of its sales coming from the casual category. Stacy Adams was down 3% for the quarter. Stacy Adams continues to be the leading brand for accessible fashion footwear, and we are well-positioned from an inventory and style perspective for the key upcoming prom and wedding seasons. Our legacy brands all experienced resurgent sales in 2022, as we benefited from historically high sell-throughs based on robust demand for refined footwear. Lower than normal inventory levels at retail also resulted in additional shipments through pipeline fill. As of Spring 2023, retail inventory levels have been reset and sell-through rates for our brands have normalized at slightly above pre-pandemic levels. While accounts are now taking a cautious approach to the market as they assess near-term consumer spending, we remain optimistic about our long-term prospects given the strength of our brands and our ability to favorably compete within the non-athletic footwear category.
BOGS first quarter sales were down 2%. After a record 2022, we have seen BOGS’ wholesale sales slow in 2023 as retailers remain cautious about adding to their outdoor footwear inventory given the mild winter in many parts of the country. We anticipate this sales trend to continue into the Fall as accounts right-size their inventory. We see this as a temporary set-back for the BOGS brand. BOGS experienced strong demand throughout the pandemic and has enjoyed extraordinary direct-to-consumer growth. While we are heavier than normal in terms of our BOGS inventory levels, we believe it is a manageable situation as we were careful to invest in evergreen
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styles. Overall, the BOGS brand is healthy and maintains a leadership position within the weather boot category, as well as an expanding casual lifestyle business. We project a return to more normalized inventory levels in the fourth quarter of 2023 and a rebound in sales growth in 2024.
In our Retail segment, sales were up 14% for the quarter. Most of the increase was driven by internet sales; brick-and-mortar sales also increased for the quarter. First quarter retail operating earnings rose 55%. Our e-commerce team has been focused on reducing expenses as a percent of sales. The results this quarter indicated the progress that has been made in controlling expenses. Industry statistics show decreases in online sales year-over-year for footwear. We are currently bucking that trend. However, the challenging footwear retail market makes us mindful of the need to manage our expenses to maintain a healthy net profit margin.
Florsheim Australia’s net sales were up 17% for the quarter. In local currency, they were up 24%. While we were up against an easy comparable due to last year’s first Omicron partial shut-down in Australia and other overseas markets, our performance reflects a solid post-pandemic business model for the region. As in the U.S., our business overseas is trending well but faces uncertainty related to economic pressures as the world navigates higher interest rates and cautious consumer demand.
Consolidated Sales and Earnings
Consolidated net sales were a first-quarter record of $86.3 million, up 6% compared to our previous record of $81.4 million in 2022. Consolidated gross earnings increased to 43.1% of net sales compared to 35.8% of net sales in last year’s first quarter, due mainly to higher gross margins in our Wholesale segment. Operating earnings were a first-quarter record of $10.4 million, up more than 90% over last year’s first quarter operating earnings of $5.4 million. Net earnings were a first-quarter record of $7.4 million, or $0.78 per diluted share, up 84% compared to $4.1 million, or $0.42 per diluted share, last year.
Financial Position
At March 31, 2023, our cash, short-term investments, and marketable securities totaled $30.7 million and we had $20.6 million outstanding on our $50.0 million revolving line of credit. During the first three months of 2023, we generated $23.0 million of cash from operations. We used funds to pay down $10.5 million on our line of credit, to pay $4.6 million in dividends, and to repurchase $1.5 million of our common stock. We also had approximately $660,000 of capital expenditures.
SEGMENT ANALYSIS
Net sales and earnings from operations for our segments for the three months ended March 31, 2023 and 2022, were as follows:
Three Months Ended March 31, | % | ||||||||
2023 |
| 2022 |
| Change |
| ||||
(Dollars in thousands) | |||||||||
Net Sales |
|
|
|
|
|
| |||
North American Wholesale |
| $ | 69,897 |
| $ | 67,100 |
| 4 | % |
North American Retail |
| 8,930 |
| 7,860 |
| 14 | % | ||
Other |
| 7,467 |
| 6,400 |
| 17 | % | ||
Total | $ | 86,294 | $ | 81,360 |
| 6 | % | ||
Earnings from Operations | |||||||||
North American Wholesale | $ | 8,829 | $ | 4,846 |
| 82 | % | ||
North American Retail |
| 1,282 |
| 828 |
| 55 | % | ||
Other |
| 275 |
| (243) |
| 213 | % | ||
Total | $ | 10,386 | $ | 5,431 |
| 91 | % |
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North American Wholesale Segment
Net Sales
Net sales in our Wholesale segment for the three months ended March 31, 2023 and 2022, were as follows: