John Wittkowske - Senior Vice President, Chief Financial Officer and Secretary Thomas Florsheim - Chairman and Chief Executive Officer

Welcome to the Fourth Quarter and Full-Year 2017 Earnings Release Conference Call. My name is Victoria, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. And later, we will conduct a question-and-answer session. Please note that this conference is being recorded. And I’ll now turn the call over to John Wittkowske. John, you may begin.

Thank you, Victoria. Good morning. Welcome to Weyco Group’s conference call to discuss our fourth quarter and 2017 results. On this call with me today is Tom Florsheim Jr., our Chairman and CEO. 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 results – or actual events 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. The 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. Net sales for the fourth quarter of 2017 were $80.3 million, down 2%, as compared to 2016 fourth quarter sales of $82.1 million. Operating earnings were $10.3 million in the fourth quarter, up 17% as compared to $8.8 million last year. Net earnings attributable to Weyco Group were $8.1 million this quarter and $8.2 million last year. Diluted earnings per share were $0.79 per share in the fourth quarter, compared with $0.78 per share in 2016. There were three significant nonrecurring adjustments that impacted the comparison of fourth quarter results. The first adjustment, which was recorded in the fourth quarter of 2017 reduced the company’s income tax provision for the impact of the 2018 tax reform bill. This benefit resulted from adjusting our deferred tax balances to reflect the new corporate tax rate. Additional benefits are…

Thank you, John, and good morning, everyone. Our North American wholesale business was relatively flat for the quarter and down 5% for the year. 2017 was a difficult retail year in footwear and apparel and our results reflect the environment. In the back-half of the year, our wholesale business gained traction due to the strong performance of two of our divisions. While soft goods retail still has its challenges, we feel we are well-positioned to pick up market share in 2018. BOGS sales fell 10% in the fourth quarter and 9% for the year, and the brand’s performance was indicative of the category. The fourth quarter looked very promising during early November cold snap, which impacted much of the country. Business fell off during a warm December, which lacked precipitation. In general, retailers are taking a very conservative approach towards seasonal inventory by limiting replenishment in order to end the season without significant markdown liabilities. While the weather in early 2018 helped to clean up – clean out, excuse me, retailer stock and better position the industry for next fall, it remains clear that we need to continue to focus on diversifying BOGS away from dependency on the timing of winter weather. We believe we’re making good progress towards this end, but that transition will take time as we further develop our non-seasonal work business and expand our assortment of lightly insulated footwear across all genders. Our Stacy Adams business was up 10% for the quarter, but was down 2% for the year. The increase was driven by strong sales at retail, especially in the e-commerce and shoe chain trade channels. We feel good about the direction of this business as Stacy Adams has been our most consistent brand over recent years and it has a strong following for both…

Victoria, you can ask for questions.

[Operator Instructions] I’m showing no questions.

Okay, then we thank, everybody, for listening in, and have a great day. Thank you.

Thank you, ladies and gentlemen. You may now disconnect.

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