Financial Data and Key Metrics Changes - Net sales for Q1 2023 reached a record $86.3 million, up 6% from $81.4 million in Q1 2022 [5] - Consolidated gross earnings increased to 43.1% of net sales compared to 35.8% in the previous year [5] - Operating earnings were a record $10.4 million, up more than 90% from $5.4 million in Q1 2022 [6] - Net earnings were a record $7.4 million or $0.78 per diluted share, up 84% from $4.1 million or $0.42 per diluted share in 2022 [6] Business Line Data and Key Metrics Changes - North American wholesale segment net sales reached a record $69.9 million, up 4% from $67.1 million in 2022, driven by higher unit selling prices despite a 5% decrease in pairs shipped [7] - Florsheim brand sales grew by 15% for the quarter, achieving record quarterly sales [7] - North American retail segment net sales were a record $8.9 million, up from $7.9 million in 2022, primarily due to higher online sales [9] - Other operations, including Florsheim Australia, reported net sales of $7.5 million, up 17% compared to $6.4 million in 2022 [12] Market Data and Key Metrics Changes - Florsheim Australia's net sales increased by 17% for the quarter, with a 24% increase in local currency [25] - The overall inventory as of March 31, 2023, was $107 million, down from $128 million at December 31, 2022, indicating normalized supply chain conditions [26] Company Strategy and Development Direction - The company aims to expand the Florsheim brand into the hybrid and everyday casual market while maintaining its position in the refined footwear category [17] - The management is optimistic about long-term prospects despite current economic uncertainties, focusing on maintaining a healthy profit margin and managing expenses [20][24] - The company plans to continue paying down debt while also considering acquisitions in the long run [32] Management's Comments on Operating Environment and Future Outlook - The management expressed satisfaction with the first quarter results despite a challenging retail environment, highlighting strong sales and earnings growth [16] - There is caution regarding near-term consumer spending, but confidence remains in the brand's strength and competitive position [20] - The company anticipates a rebound in sales growth for the BOGS brand in 2024 after a temporary slowdown [22] Other Important Information - The Board of Directors declared a cash dividend of $0.25 per share, a 4% increase from the previous rate of $0.24 [15] - Cash, short-term investments, and marketable securities totaled $30.7 million, with $20.6 million outstanding on a $50 million revolving line of credit [14] Q&A Session Summary Question: Dividend increase - A participant expressed gratitude for the modest increase in the dividend [27] Question: Cash management and investment - The CFO explained that excess cash is invested in low-risk marketable securities and emphasized the focus on paying off debt rather than reinvesting [27][29] Question: Interest income and capital management - The participant inquired about the balance between cash earning lower interest and the interest paid on debt [28] Question: Capital allocation methodology - The CEO discussed the approach to dividend payout ratios and stock buybacks, emphasizing the goal of maintaining free cash flow for potential acquisitions [32]
Weyco (WEYS) - 2023 Q1 - Earnings Call Transcript