Thanks for standing by, and welcome to the Weyco Group fourth quarter and full year 2024 earnings conference release conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Judy Anderson, Chief Financial Officer. Please go ahead. Thank you. Good morning and welcome to Weyco Group's conference call to discuss fourth quarter and full year 2024 results. On this call with me today are Tom Florsheim Jr., Chairman and Chief Executive Officer, and John Florsheim, President and Chief Operating Officer. Before we begin to discuss the results for the quarter and year, I will read a brief cautionary statement. During 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 these statements are just predictions and that actual events or results may differ materially. We refer you to the section entitled Risk Factors in our most recent annual report on Form 10-K, which provides a discussion of important factors and risks that could cause our actual results to differ materially from our projections. These risk factors are incorporated here and by reference. Overall net sales for the fourth quarter of 2024 were $80.5 million compared with $80.6 million in the fourth quarter of 2023. Consolidated gross earnings were 47.9% of net sales for the quarter compared to 50.3% of net sales in last year's fourth quarter. Quarterly operating earnings were flat at $11.5 million in both the fourth quarters of 2024 and 2023. Net earnings were $10 million or $1.04 per diluted share for the quarter versus $8.5 million or $0.90 per diluted share in the fourth quarter of 2023. In the North American wholesale segment, net sales for the quarter were $60.4 million, up 1% compared to $59.6 million last year. Higher sales of the Florsheim and Nunn Bush brands were mostly offset by lower sales of Bogs and Stacy Adams. Wholesale gross earnings were 42.4% of net sales compared to 44.9% of net sales in last year's fourth quarter. Wholesale selling and administrative expenses totaled $16.7 million or 28% of net sales for the quarter compared to $18.9 million or 32% of net sales last year. The decrease was mainly due to lower advertising and employee costs. Wholesale operating earnings increased 14% to $8.9 million for the quarter from $7.9 million in 2023 due to higher sales and lower expenses. Net sales in our North American retail segment were $14.1 million for the quarter, up 1% over $13.9 million in 2023. The slight increase was due to higher direct-to-consumer sales of Bogs and Florsheim footwear. Retail gross earnings as a percent of net sales were 65% and 65.8% in the fourth quarters of 2024 and 2023, respectively. Retail operating earnings totaled $2.5 million for the quarter, down 28% from $3.5 million last year. The decrease was due to higher retail selling and administrative expenses, primarily web advertising and freight. Our other operations historically included our retail and wholesale businesses in Australia, South Africa, and Asia-Pacific, collectively referred to as Florsheim Australia. We ceased operations in the Asia-Pacific region in 2023 and completed the wind-down of that business. Accordingly, fourth quarter 2024 results of the other category only reflect the operations of Australia and South Africa. Net sales of Florsheim Australia, were $6 million, down 15% from $7.2 million in the fourth quarter of 2023. The decrease was mostly due to closing our Asia operations. Sales in Australia were down 3% for the quarter due to the impact of fewer retail stores operating compared to the same period last year. Australia's same-store sales were up 11% for the quarter. Florsheim Australia's gross earnings were 62.5% of net sales for the quarter compared to 65.4% of net sales in the fourth quarter of 2023. Its quarterly operating earnings totaled $100,000 for the quarter compared to $200,000 last year. Interest income totaled $900,000 compared to $500,000 in last year's fourth quarter. This year included interest earned on higher cash balances in the U.S. and Canada. The provision for income taxes decreased $700,000 compared to last year's fourth quarter due to a lower effective tax rate this year. I will now discuss the full year 2024 results. Consolidated net sales for the full year were $290 million, down 9% compared to sales of $318 million in 2023. Consolidated gross earnings increased to 45.3% of net sales in 2024, up from 44.9% of net sales last year, due mainly to higher gross margins in our North American wholesale segment. Full year 2024 operating earnings were $36.6 million, down 11% compared to $41 million in 2023. Net earnings were a record $30.3 million or $3.16 per diluted share in 2024, compared to $30.2 million or $3.17 per diluted share in 2023. North American wholesale net sales were $228 million in 2024, down 9% compared to $250 million in 2023. The decrease was primarily due to a 27% decline in Bogs sales, but also due to lower sales of the Stacy Adams and Nunn Bush brands this year. Florsheim's net sales were up 2% for the year. Wholesale gross earnings as a percent of net sales were 40.2% in 2024 and 39.7% in 2023. Gross margins improved because of lower inventory costs, primarily inbound freight. Wholesale selling and administrative expenses totaled $60.1 million in 2024, compared to $66 million in 2023. The decrease in 2024 was primarily due to lower employee costs, mainly commission-based compensation. Also, advertising costs were down due to the reallocation of certain expenditures historically charged to our wholesale segment that primarily benefit our websites. As a percent of net sales, wholesale selling and administrative expenses were flat at 26% in both 2024 and 2023. Wholesale operating earnings were $31.5 million in 2024, down 5% from record operating earnings of $33.3 million in 2023, mainly as a result of lower sales. In our North American retail segment, net sales were a record $38.7 million in 2024, up 2% over our previous record of $38 million in 2023. The increase was primarily due to higher direct-to-consumer sales of Florsheim and Bogs footwear. Retail gross earnings as a percent of net sales were flat at 65.9% in both 2024 and 2023. Retail operating earnings totaled $5.3 million in 2024, down 21% compared to $6.8 million in 2023. The decrease was due to higher retail selling and administrative expenses this year, primarily web advertising and freight. As I discussed earlier, web advertising costs were up due to the reallocation of certain expenditures from our wholesale segment. Net sales at Florsheim, Australia, totaled $23.6 million in 2024, down 20% from $29.6 million in 2023. The decrease was primarily due to closing our Asia-Pacific operations. Sales in Australia were down 10% for the year, due mainly to the impact of fewer retail stores operating compared to last year. Australia's same-store sales were up 2% for the year. Florsheim, Australia's gross earnings were 61% of net sales in 2024 versus 62.5% of net sales in 2023. Florsheim, Australia generated operating losses totaling $200,000 in 2024 compared to operating earnings of $1 million in 2023. The decrease was due to lower sales. Interest income totaled $3.7 million in 2024 compared to $1.1 million in 2023. As described earlier, this year included interest earned on higher cash balances in the U.S. and Canada. The annual provision for income taxes decreased $1.2 million compared to 2023 due to a lower effective tax rate this year. In early 2025, the U.S. government imposed additional tariffs on goods sourced from China. These tariffs will increase our cost of goods across all our brands. In an effort to mitigate the impact of the tariffs, we have already begun negotiating price reductions with our Chinese suppliers and are in the process of reviewing our wholesale pricing for fall. At December 31, 2024, our cash and marketable securities totaled $77.3 million, and we had no debt outstanding on our $40 million revolving line of credit. During 2024, we generated $16.2 million of cash from operations. We used funds to pay $9.7 million in dividends and to repurchase $600,000 of our common stock. We also had $1.4 million of capital expenditures in 2024. We estimate that our 2025 annual capital expenditures will be between $1 million-$3 million. On January 2, 2025, we paid our regular fourth quarter dividend of $0.26 per share, as well as a one-time special dividend of $2 per share for a total dividend payment of $21.6 million. On March 4, 2025, our Board of Directors declared a regular cash dividend of $0.26 per share to all shareholders of record on March 14, 2025, payable March 31, 2025. I would now like to turn the call over to Tom Florsheim Jr., our Chairman and CEO. Good morning, everyone. As Judy mentioned, our overall net sales were flat for the fourth quarter and down 9% for the year. While we saw solid sequential improvement in the final quarter, 2024 proved to be a challenging year for our wholesale business. Consumers remain cautious amid ongoing economic uncertainty, limiting their discretionary spending on non-essential goods. Despite these challenges, we are navigating short-term pressures and evolving our portfolio of brands to position the company for future growth. Bogs sales declined 17% in the fourth quarter. The brand faced headwinds due to mild winter weather, which reduced consumers' urgency to purchase new boots. With fewer cold and snowy days, pre-holiday demand for insulated and waterproof footwear was softer than anticipated. However, winter weather did eventually arrive across most of the country in January and February, and retailers are now selling through their inventory. With leaner stock levels, our retail partners are in a much better position to bring in fresh assortments, and we are starting to see renewed interest in the category for fall 2025. As discussed in previous calls, we believe the Bogs new seamless construction, which is lighter and more durable than traditional vulcanized product, is a key differentiator in the insulated boot segment. We are also excited about our new offerings in non-insulated footwear, such as the Bogs Boga, which launches in March. The Boga is a versatile, lightweight clog featuring superior comfort and an outsole that provides better traction and durability than other outdoor clogs. The last two years have been challenging for Bogs, and we are focused on re-energizing the brand through product innovation and expanding its retail presence in the spring-summer selling season. Our combined legacy business grew 8% in the fourth quarter, with Florsheim leading the way with a 22% increase, Nunn Bush rising 4%, and Stacy Adams declining 8%. The dress footwear category continues to face challenges as retailers prioritize other segments. However, Florsheim has bucked this trend, solidifying its market position by gaining share in refined dress footwear while expanding its presence in hybrid and casual styles. Stacy Adams had a difficult quarter, reflecting broader challenges in the dress footwear market. The brand remains a leader in contemporary dress footwear and continues to perform well in retail accounts that emphasize dress shoes. However, future growth depends on the brand diversifying its product assortment to capture demand for hybrid and refined casual styles. While this transition takes time, early successes in the hybrid category are encouraging. Nunn Bush had a solid quarter, growing 4%. With a strong value proposition and innovative comfort technology, Nunn Bush has evolved beyond its dress shoe roots and has experienced retail success in the casual, hybrid, and soft-toe work categories. This spring, Nunn Bush is launching a collaboration with Milwaukee chef and influencer Adam Pawlak. Pawlak, who has appeared on culinary shows such as Hell's Kitchen and Beat Bobby Flay, worked with Nunn Bush designers to create an inspired collection of slip-resistant and water-resistant shoes designed for a variety of work environments. Over the last few years, Nunn Bush has built a meaningful presence in the work shoe category, and we believe the Nunn Bush and Adam Pawlak collaboration will help further expand sales in this important area of business. In our retail segment, sales were up 1% for the quarter and 2% for the year. We continue to invest in our direct-to-consumer business, viewing our online stores as billboards for our brands, and our e-commerce platform as a key driver of profitable growth. Florsheim Australia's net sales declined 15% for the quarter and 20% for the year. This business includes the Australia and New Zealand markets, as well as Pacific Rim countries and South Africa. The decline in 2024 was largely due to the closure of our Hong Kong office and retail stores as the division was not profitable. We are now managing our Asia wholesale customers through our Melbourne office. While 2024 was a challenging year for Florsheim Australia, we are pleased to report an increase in same-store retail sales in Australia. Our top priority for Florsheim Australia in 2025 is growth of our wholesale business. For the year, our overall gross margins were 45.3% in 2024, up from 44.9% in 2023. We are happy with our margins, and as Judy mentioned, have been negotiating with our suppliers in China to mitigate the effects of tariffs and will likely need to raise our prices in the near future to account for tariff-related cost increases. That concludes our formal remarks. Thank you for your interest in Weyco Group, and I'd now like to open the call to your questions. Certainly. Ladies and gentlemen, if you have a question at this time, please press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. One moment for our first question. Our first question comes from the line of David Wright from Henry Investment Trust. Your question, please. Yeah. Hello. Good morning, everyone. Good morning. Morning. Want to thank you very much, Tom, for the extensive commentary, and Judy as well for what happened for the year and providing some context. As always, I really appreciate you having these calls and taking the time to prepare for them and conduct them. Can somebody walk me through kind of the mechanics of tariff for Weyco? You have an order coming your way, and what happens? What are the mechanics that gets the money from wherever it comes from to wherever it goes? Sure. The mechanics are basically—you are not talking about just these additional tariffs. You are talking about tariffs in general, correct? Yeah, for sure. I mean, it would apply to the additional ones. I am just trying to visualize the flow of the cash. Okay. Essentially, we have to put up a bond that is equal to the amount of tariffs that we pay on average in a monthly period. When the goods are cleared—and we broker the goods ourselves when we clear them—we pay customs for whatever tariffs are on goods per the U.S. government. If the tariff is 26%, which it has just gone from 26% to 36% in total, then if you take a shoe that is roughly $20 first cost, when that shoe is cleared, we have to pay 36% of the $20, which is a little more than $7. It is a real cost to us. It is paid by us here in the U.S. In cases where we are importing goods into Australia or into Canada, we pay their tariffs the same way, essentially. You have posted a bond. You are getting deliveries every week, let's say, and then monthly or quarterly or whenever. You are writing a check to whom? U.S. Customs. Does Customs have your invoices when the stuff comes in, or are you just declaring what the value of the shipment is and calculating the tariff based on your declaration? Judy, do you know the specifics of that? It is based on our declaration. Yeah. Everything is done paperless today. All the documents are available if Customs wants to look at them. We are C-TPAT approved. We have a good relationship with Customs, and it is done pretty seamlessly. We do receive containers every single day here. Right. It is not like Customs is some guy sitting there with an adding machine going over your invoice of all these lots of shoes. You are just saying, "Hey, here is a shipment of $100,000, and we owe you $36,000." Exactly. They have the right to audit what we are declaring at any point for something like five years. I appreciate kind of the detail around that question. I hope you did not think it was unusual. Congratulations on another record year, and thanks again for that special dividend. Thanks for your questions, and we look forward to hearing from you on our next call. Okey-doke. Thank you. Our next question comes from the line of John Deysher from Pinnacle. Your question, please. Good morning, everyone. Good morning, John. Following up on David's tariff question, can you remind us—excuse me—what percentage of your cost of goods sold came from China last year, roughly, as well as other countries of origin like Vietnam, India, and whatever other countries you might have sourced from? Sure. I was anticipating that question, and what I'm going to give you is actually what we're looking at in the current year. Just give me one second to pull this up. Hang on one second. I apologize. I'm having trouble pulling up the email, but John— Take your time. I think the main question right now goes to probably China, and about 75% of our purchases this year will be from China. Our second biggest country is India. We've been in India for almost 40 years. With all of this on the horizon, we've been growing our sourcing in India. We're also in Cambodia, which is smaller. It's just probably a little under 5%. Vietnam, which is also under 5%. The Dominican Republic, which is about the same. It basically goes China 75, India probably about 15, and then the rest divided between those other three countries. Okay. That's helpful. What are the tariffs today on those other countries, India, Cambodia, Vietnam, and Dominican Republic at this point? Yeah. Essentially, most of the product that we bring in is leather upper products. The harmonized duty code in the U.S. is fairly complex, and you have different duties for the Bogs boots than you do for the leather shoes. If you're talking about just the leather shoes, which is the biggest part of what we import, the tariff has historically been 8.5%. With what happened in 2018 with the tariffs that President Trump imposed at that time, they were originally higher, but then they were reduced to 7.5% additional. That brought us to 16% on leather footwear. President Biden kept that 7.5% in place, so the 16% is what we were paying as of the end of 2024. President Trump put in the additional 10%, which happened maybe two or three weeks ago, so that brought the total number up to 26%. Now with the additional 10% that went into effect on Tuesday, that brought the number to 36%. If you look at other shoes, the base number is different. For example, on PU upper shoes, it is 6%. On some of the Bogs products, it is 12%. On other Bogs products, it is really already very high at like 37.5%. The additional 10% plus 10% that's been put on in the last few weeks is 20% on top of those other numbers. If that's clear, I'd be happy to elaborate if you'd like me to. I guess on the mix of business, the type of shoe that you anticipate importing in this year from those non-Chinese countries, what's a reasonable tariff range, do you think, for 2025? Would it be 25%-35% or 35%-45% or just kind of a range for the current mix of business? I would say that since—let me back up and just say this. We carry typically about 3 million pairs of inventory in here, and we ship about 7 million pairs a year. When we saw this as potentially happening, we brought as much of our shipments forward as we could. The way that these tariffs worked is anything that was in transit from China on the first date that the tariffs were declared, the first 10%, those avoided the tariff. We had another approximately one million pairs in transit that avoided any of these extra tariffs. When you look at the blend on the remaining pairs that we are bringing this year, it will probably be, I would guess, in the low 30%. You have some product that is going to be higher because of Bogs, but you have some product that will be lower because it is PU uppers, which we do carry in, for example, on the Nunn Bush brand. I would say the average would be in the low 30%. Okay. That is for non-Chinese imports, correct? Oh, no. I am sorry. I thought you were speaking of China. If you average everything in, Judy, do you have a calculator here? Because I think—hang on. If you just take 25% times 8.5% and 75% times 30%, that would probably be a pretty good guess. 25% times 8.5%, and then 75% times 31%, say. And then add those. One second, John. We're doing a little math here. The thing that everybody has—the thing that everybody has to realize is that on April 2, there are possibly going to be these reciprocal tariffs. It makes it very uncertain as far as the best way forward from the standpoint of sourcing because you do not want to move a lot of product to, say, Vietnam right now because Vietnam is on the hit list. You could end up with even higher tariffs out of Vietnam. What we are doing is kind of waiting to see what happens in April. Judy, do you have that number? 25%. 25%, John. An average of about 25%. All right. That is very helpful. In your commentary, you said you are working with your offshore vendors regarding pricing. Are they receptive to eating part of the cost of the tariffs, or what is that dynamic like in terms of— yes. The short answer is yes, they are. We have long relationships with the factories that we do business with in China going back over a decade, some 20 years. We have cultivated those relationships. We are a very good partner to do business with, and we have grown our business with people that we feel make great shoes and offer good value. When this happened—actually, before this happened, we checked in with them, and they are willing to help us out. I mean, there is a limit to what they can do because the margins in manufacturing are not big. We have made a lot of great shoes in China over the past, say, 25 years, as long as we have been in China. It is very hard to completely replace them. We are committed to having a fairly large percentage of our production remain in China at this point because with the pairs that we need and with our quality standards, it is almost impossible for us to replace them. I think it is important from a context standpoint because of the desire to bring more manufacturing back to the U.S. We manufactured 100% of our shoes in the U.S. until, say, the early 1980s. We started sourcing elsewhere after that. The companies that remained in the U.S. had to sell shoes for much more, and several of those companies have gone out of business. For our industry, it was necessary for shoe manufacturing to move overseas. I think it's over 90% of the shoes that are sold in the U.S. are made overseas, and that's because it takes a tremendous amount of unskilled labor to make footwear. You just literally cannot do it in the U.S. The component infrastructure is gone here. There's no easy way, and probably it would be impossible to bring manufacturing back to the U.S. Right. Okay. That's good. I mean, you're pulling what levers you can to perhaps have your vendors share part of the cost. Absolutely. As I said before, we have very good relationships, and the factories over there are all working with us and trying to help. That will mitigate some of this. You're not going to mitigate it all, though. You're going to have to raise prices. Yeah. We're going to have to raise prices. Okay. As will everyone else. Right. Exactly. Yeah. Okay. Good. I appreciate the color. Thank you. Thanks, John. Thank you. Once again, if you have a question at this time, please press star one one on your telephone. This does conclude the question and answer session of today's program. I'd like to hand the program back to Judy Anderson for any further remarks. Thank you, everyone, for tuning in today, and we hope you have a great week. Thank you. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.