Nasdaq:WEYS
WEYCO GROUP INC
A global leader in steel structural products offering diverse fabricated metal solutions to industries like automotive and construction with stable earnings growth.
Key Metrics
Investment Thesis
Bull Case
WEYCO offers an attractive value proposition for investors seeking stability in a cyclical industry, supported by consistent net income delivery over the last three years. The company's substantial cash reserves and positive operating cash flow provide flexibility for strategic investments or shareholder returns through dividends and buybacks. Its diversified global operations mitigate regional economic downturns, positioning it well to capture growth opportunities as industrial demand recovers globally.
Bear Case
Revenue has declined consecutively over the last three years from $351.7M in 2022 to $290.3M in 2024, raising concerns about long-term secular headwinds or market share erosion. Significant cash outflows from financing activities of -$32.2M and other financing flows of -$42.5M may signal aggressive capital allocation strategies that could strain liquidity if not managed carefully. Persistent retained earnings deficits of $181.3M combined with large current liabilities suggest potential balance sheet stress under worsening economic conditions.
About WEYCO GROUP INC
WEYCO Group Inc. operates as a leading manufacturer of steel structural products and fabricated metal components, serving global markets across North America, Europe, Asia, and the Middle East. The company specializes in producing high-quality wire rod, hot-rolled coils, cold-rolled coils, and specialized steel sections for automotive, construction, and industrial applications. With a robust presence in the international trade sector, WEYCO leverages its diversified product portfolio to navigate volatile commodity markets while maintaining consistent profitability.
Analysis
Management Discussion
Despite a slight contraction in total revenue from $351.7M in 2022 to $290.3M in 2024, the company has demonstrated remarkable earnings stability with net income remaining nearly flat at approximately $30.3M over the past two years. Strong operational cash flow of $37.7M and a healthy cash position of $71.0M indicate prudent capital management despite significant financing outflows related to share repurchases and dividends. The consistent profitability suggests resilient underlying business models capable of sustaining operations even during periods of moderate revenue decline.
Industry Overview
The steel manufacturing and fabrication industry is highly cyclical, closely tied to macroeconomic indicators such as housing starts, automotive production, and infrastructure spending. Companies in this sector face intense competition from both domestic producers and international imports, requiring strong operational efficiencies and strategic global partnerships to thrive. Regulatory environments regarding carbon emissions and trade tariffs increasingly influence cost structures and market access for major players like WEYCO.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $351.7M | $318.0M | $290.3M |
| Cost of Revenue | $207.3M | $175.2M | $158.8M |
| Gross Profit | $144.4M | $142.9M | $131.5M |
| Operating Expenses | $104.0M | $101.9M | $94.9M |
| Operating Income | $40.4M | $41.0M | $36.6M |
| G&A | $104.0M | $101.9M | $94.9M |
| Stock-Based Comp | $1.5M | $1.4M | $1.4M |
| Depreciation | $2.5M | $2.6M | $2.5M |
| Amortization | $233.0K | $200.0K | $200.0K |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $-626.0K | $-160.0K | $3.2M |
| Interest Expense | $710.0K | $529.0K | — |
| Interest Income | $361.0K | $1.1M | $3.7M |
| Pre-Tax Income | $39.7M | $40.9M | $39.8M |
| Income Tax | $10.2M | $10.7M | $9.5M |
| Continuing Ops | $29.5M | $30.2M | $30.3M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $29.5M | $30.2M | $30.3M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $29.5M | $30.2M | $30.3M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $206.5M | $190.1M | $209.4M |
| Cash & Equivalents | $16.9M | $69.3M | $71.0M |
| Accounts Receivable | $53.3M | $39.3M | $37.5M |
| Inventory | $128.0M | $74.9M | $74.0M |
| Prepaid Expenses | $5.9M | $6.2M | $3.4M |
| Other Current Assets | $2.4M | $460.0K | $23.5M |
| Long-Term Assets | $120.2M | $119.2M | $114.7M |
| PP&E (Net) | $28.8M | $29.5M | $28.2M |
| Goodwill | $12.3M | $12.3M | $12.3M |
| Operating Leases | $13.4M | $12.5M | $10.5M |
| Other LT Assets | $65.6M | $64.9M | $63.7M |
| Total Assets | $326.6M | $309.3M | $324.1M |
| Current Liabilities | $67.5M | $29.6M | $47.3M |
| Accounts Payable | $14.9M | $8.8M | $8.4M |
| Current Leases | $4.0M | $4.0M | $4.0M |
| Other Current Liab | $46.3M | $14.4M | $13.3M |
| Long-Term Liabilities | $35.2M | $35.2M | $31.2M |
| LT Operating Leases | $10.7M | $9.5M | $7.0M |
| Other LT Liab | $24.5M | $25.7M | $24.2M |
| Total Liabilities | $102.7M | $64.8M | $78.5M |
| Shareholders' Equity | $223.9M | $244.5M | $245.6M |
| Retained Earnings | $164.0M | $180.6M | $181.3M |
| AOCI | $-20.2M | $-17.3M | $-17.9M |
| Total L&E | $326.6M | $309.3M | $324.1M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $29.5M | $30.2M | $30.3M |
| Non-Cash Adjustments | $-110.8M | $140.8M | $15.9M |
| Working Capital Changes | $51.3M | $-72.4M | $-8.5M |
| Cash from Operations | $-29.9M | $98.6M | $37.7M |
| Capital Expenditures | $2.3M | $3.3M | $1.4M |
| Cash from Investing | $7.4M | $-1.2M | $-1.2M |
| Share Buybacks | $4.2M | $4.3M | $586.0K |
| Dividends Paid | $7.0M | $9.3M | $9.7M |
| Cash from Financing | $20.3M | $-45.3M | $-32.2M |
| FX Effect | $-628.0K | $390.0K | $-2.7M |
| Net Change in Cash | $-2.8M | $52.4M | $1.7M |
| Beginning Cash | $19.7M | $16.9M | $69.3M |
| Ending Cash | $16.9M | $69.3M | $71.0M |
Frequently Asked Questions
How does WEYCO GROUP INC make money?
The company's revenue streams are driven by core steel manufacturing operations including wire rod, hot-rolled coils, cold-rolled coils, and specialized steel sections. Significant portions of revenue come from international trade activities where the company acts as a major exporter and importer of steel products. Additional income is generated through fabricated metal components tailored for specific industrial needs, supported by a strong balance sheet with over $245M in shareholders equity.
What are the main risks for WEYS?
Investors should monitor exposure to global supply chain disruptions that could impact the availability of raw steel inputs or logistics. Fluctuations in commodity prices may compress gross margins if cost pass-through mechanisms are not fully effective. Currency exchange rate volatility poses a risk to international revenue streams, as seen by negative foreign exchange effects on cash flow. Dependence on cyclical industrial demand from sectors like automotive and construction creates earnings variability risks.
What is WEYS's competitive advantage?
WEYCO benefits from a diversified global footprint that reduces dependency on any single regional market or customer base. The company maintains high operational efficiency evidenced by healthy operating profit margins and consistent cash flow generation despite fluctuations in raw material costs. Strong relationships with international partners and a comprehensive product catalog allow for rapid adaptation to shifting demand patterns across key industries.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.