McRae Industries, Inc. Reports Earnings For Fiscal 2015

10 Nov, 2015, 16:30 ET from McRae Industries, Inc.

MOUNT GILEAD, N.C., Nov. 10, 2015 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets:   MCRAA and MCRAB) reported consolidated net revenues for fiscal 2015 of $108,673,000 as compared to $103,629,000 for fiscal 2014.  Net earnings for fiscal 2015 totaled $6,641,000 as compared to $7,548,000 for fiscal 2014.  Net earnings per diluted Class A common share were $3.17 for fiscal 2015 as compared to $3.51 for fiscal 2014.  

CONSOLIDATED RESULTS OF OPERATIONS, FISCAL 2015 COMPARED TO FISCAL 2014

Consolidated net revenues for fiscal 2015 amounted to approximately $108.7 million as compared to $103.6 million for fiscal 2014.  Our western/lifestyle products business grew from $66.3 million for fiscal 2014 to $67.1 million for fiscal 2015 as demand for our premium western boot products increased while demand for our moderately priced western and lifestyle products was down slightly from the previous year as the women's fashion market shows a small degree of softness. Consolidated net revenues from our work boot product sales totaled $41.3 million for fiscal 2015 as compared to $37.0 million for fiscal 2014.  This growth in work boot net revenues was primarily the result of higher military boot production levels associated with our Department of Defense and Israeli government contracts. In addition, our commercial military boot business grew remarkably over the prior year.  Net revenues associated with our other small businesses were insignificant for fiscal 2015 and we expect their contribution to be minimal in the future.  For fiscal 2016, we are cautiously optimistic that the improved economy will continue to have a positive impact on our western/life style boot business and our commercial work and military boot business.  In addition, we expect our military boot contract business to provide a solid base for overall net revenue performance for fiscal 2016.  

Consolidated gross profit for fiscal 2015 totaled $29.3 million as compared to $30.1 million for fiscal 2014. Gross profit as a percentage of net revenues associated with our western/lifestyle boot segment amounted to 35.7%, down slightly from 36.3% for fiscal 2014 primarily due to changes in the product mix.  Gross profit as a percentage of net revenues related to our work boot business fell from 16.1% for fiscal 2014 to 12.5% for fiscal 2015.  This decline in gross profit as a percentage of net revenues was primarily attributable to our military boot business as a result of inefficiencies associated with the hiring and training of a significant number of production workers in anticipation of increased production levels for fiscal 2016.

Consolidated selling, general and administrative ("SG&A") expenses amounted to $19.0 million as compared to $18.7 million for fiscal 2014.  This increase in SG&A expenses was the result of higher support costs associated with the increase in net revenues.  As a percentage of net revenues, SG&A expenses for fiscal 2015 totaled 17.5% as compared to 18.0% for fiscal 2014.  Increased expenditures for administrative related compensation expenses, advertising, professional fees and business insurance costs were partially offset by reduced sales compensation charges and employee benefit related costs.

As a result of the above, consolidated operating profit totaled approximately $10.3 million for fiscal 2015 as compared to $11.5 million for fiscal 2014.

FINANCIAL CONDITION AND LIQUIDITY

At August 1, 2015, our financial condition and liquidity remained strong as cash and cash equivalents totaled $15.4 million as compared to $18.9 million at August 2, 2014.  Our working capital totaled $51.3 million at August 1, 2015 as compared to $51.2 million at August 2, 2014.

We currently have two lines of credit with a bank totaling $6.75 million, all of which were fully available at August 1, 2015.  One credit line totaling $1.75 million (which is restricted to one hundred percent of the outstanding receivables due from the Government) expires in January 2016.  The $5.0 million line of credit, which also expires in January 2016, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.  

We believe that our current cash and cash equivalents, cash generated from operations, and available credit lines will be sufficient to meet our capital requirements for fiscal 2016.

Net cash provided by operating activities for fiscal 2015 amounted to approximately $4.3 million.  Net earnings, as adjusted for depreciation, contributed approximately $7.4 million of cash.  Accounts receivable used approximately $2.2 million of cash as fourth quarter sales for both of our boot segments increased. Higher inventory levels in our military boot business, which were partially offset by lower inventory levels for our western/work boot business used approximately $3.5 million of cash. The timing of payment for accounts payable, accrued employee benefits, accrued payroll and income tax payments provided approximately $2.5 million of cash.  

Net cash used in investing activities totaled approximately $6.5 million.  Capital expenditures, primarily for manufacturing equipment, office equipment, our plant facility expansion, and computer software upgrade used approximately $3.4 million of cash. Investment in our marketable securities portfolio used approximated $3.2 million of cash.

Net cash used to finance our dividend payments totaled approximately $1.3 million.

FORWARD-LOOKING STATEMENTS

This press release includes certain forward-looking statements.  Important factors that could cause actual results or events to differ materially from those projected, estimated, assumed or anticipated in any such forward-looking statements include: the effect of competitive products and pricing, risks unique to selling goods to the Government (including variation in the Government's requirements for our products and the Government's ability to terminate its contracts with vendors), changes in fashion cycles and trends in the western boot business, loss of key customers, acquisitions, supply interruptions, additional financing requirements, our expectations about future Government orders for military boots, loss of key management personnel, our ability to successfully develop new products and services, and the effect of general economic conditions in our markets.

 

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)








August 1,
2015


August 2,
2014


ASSETS





Current assets: 










Cash and cash equivalents


$15,437


$18,880






Short term securities


500


76






Accounts and notes receivable, less allowances
of $1,975 and $1,586, respectively


15,636


13,428






Inventories, net


25,757


22,288






Income tax receivable


122


938






Prepaid expenses and other current assets


532


553






Deferred tax assets


2,270


2,218






   Total current assets


60,254


58,381






Property and equipment, net


5,817


3,222






Other assets:










Deposits


14


14






Long term securities


3,553


872






Real estate held for investment


3,594


3,585






Amounts due from split-dollar life insurance


2,288


2,288






Trademarks


2,824


2,824






  Total other assets


12,273


9,583






   Total assets


$78,344


$71,186






 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)








August 1,
2015


August 2,
2014


LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities: 










Accounts payable


$5,599


$3,778






Accrued employee benefits


1,627


1,798






Accrued payroll and payroll taxes


1,225


1,161






Other


552


463






   Total current liabilities


9,003


7,200











Deferred tax liabilities


1,513


1,536






   Total liabilities 


10,516


8,736






Commitments and contingencies (Note 8)










Shareholders' equity:





Common Stock:





   Class A, $1 par value; authorized 5,000,000 shares


2,040


2,039

  issued and outstanding, 2,039,335 and 2,038,543


  shares, respectively







   Class B, $1 par value; authorized 2,500,000


391


392

  shares; issued and outstanding, 391,189 and 


  391,981 shares, respectively







Retained earnings


65,397


60,019






Total shareholders' equity


67,828


62,450






   Total liabilities and shareholders' equity


$78,344


$71,186






 

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)








For Years Ended


August 1,


August 2,


August 3,

2015

2014

2013








Net revenues


$108,673


$103,629


$97,071








Cost of revenues


79,347


73,488


67,539








Gross profit


29,326


30,141


29,532








Selling, general and administrative expenses


19,025


18,660


18,005








Operating profit 


10,301


11,481


11,527








Other income


324


311


204








Interest expense


(2)


(3)


(2)








Earnings before income taxes


10,623


11,789


11,729








Provision for income taxes


3,982


4,241


4,231








Net earnings 


$6,641


$7,548


$7,498





























Earnings per common share:














Earnings per common share: 







     Basic earnings per share:







        Class A


$3.77


$4.18


$4.54

        Class B


0.52


0.48


0.77

     Diluted earnings per share:







        Class A


3.17


3.51


3.79

        Class B


NA


NA


NA








Weighted average number of common shares outstanding:







       Class A


2,038,645


2,038,469


2,035,034

       Class B


391,879


392,055


399,878

        Total


2,430,524


2,430,524


2,434,912








 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)








August 1,
2015


August 2,
2014


August 3,
2013

For Years Ended



Cash Flows from Operating Activities:






Net earnings  

$6,641


$7,548


$7,498

Adjustments to reconcile net earnings to net cash provided by operating activities:






Depreciation 

785


748


686

Amortization of bond premiums

3


10


11

(Gain) loss on sale of assets

0


(40)


(282)

Deferred income taxes

(75)


87


(441)

Changes in operating assets and liabilities:






  Accounts receivable, net

(2,208)


1,966


(3,612)

  Inventories

(3,469)


758


(3,474)

  Prepaid expenses and other assets

21


(85)


(87)

  Accounts payable

1,821


(276)


681

  Accrued employee benefits

(171)


91


549

  Accrued payroll and payroll taxes

64


(48)


206

  Income tax receivable/payable

816


(1,012)


283

  Other

89


64


(347)

Net cash provided by operating activities

4,317


9,811


1,671







Cash Flows from Investing Activities:






Proceeds from sale of assets

0


87


390

Proceeds from maturing bond

0


0


75

Purchase of land for investment

(9)


(7)


(59)

Capital expenditures

(3,380)


(650)


(891)

Purchase of securities

75


0


0

Net cash used in investing activities

(3,183)


0


(1,044)


(6,497)


(570)


(1,529)

Cash Flows from Financing Activities:






Purchase of common stock






Issuance of common stock

0


0


(161)

Dividends paid

0


0


5

Net cash used in financing activities

(1,263)


(1,165)


(2,056)


(1,263)


(1,165)


(2,212)

Net (Decrease) Increase in Cash and Cash equivalents






Cash and Cash Equivalents at Beginning of Year

(3,443)


8,076


(2,070)

Cash and Cash Equivalents at End of Year 

18,880


10,804


12,874


$15,437


$18,880


$10,804







 

SOURCE McRae Industries, Inc.



RELATED LINKS

http://www.mcraeindustries.com