McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE FIRST QUARTER OF FISCAL 2022
MOUNT GILEAD, N.C., Dec. 22, 2021 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the first quarter of fiscal 2022 of $27,588,000 as compared to $18,939,000 for the first quarter of fiscal 2021. Net earnings for the first quarter of fiscal 2021 amounted to $2,222,000, or $0.98 per diluted Class A common share as compared to $494,000, or $0.21 per diluted Class A common share, for the first quarter of fiscal 2021.
FIRST QUARTER FISCAL 2022 COMPARED TO FIRST QUARTER FISCAL 2021
Consolidated net revenues totaled $27.6 million for the first quarter of fiscal 2022 as compared to $18.9 million for the first quarter of fiscal 2021. Sales related to our western/lifestyle boot products for the first quarter of fiscal 2022 totaled $19.9 million as compared to $12.1 million for the first quarter of fiscal 2021. This 64% increase can be attributed to increases across all brands. Revenues from our work boot products increased approximately 3%, from $7.0 million for the first quarter of fiscal 2021 to $7.2 million for the first quarter of fiscal 2022. This is primarily a result of decreased military boot sales offset by an increase in our Dan Post and Laredo work boot sales.
Consolidated gross profit for the first quarter of fiscal 2022 amounted to approximately $8.0 million as compared to $5.0 million for the first quarter of fiscal 2021. Gross profit as a percentage of net revenues was up from 26.6% for the first quarter of fiscal 2021 to 28.9% for the first quarter of fiscal 2022. This is primarily attributable to our lower margin military boot sales making up a smaller percentage of total sales.
Consolidated selling, general and administrative ("SG&A") expenses totaled approximately $5.1 million for the first quarter of fiscal 2022 as compared to $4.4 million for first quarter of fiscal 2021. This is primarily due to increased commissions, advertising, and healthcare costs.
As a result of the above, the consolidated operating profit for the first quarter of fiscal 2022 amounted to $2.8 million as compared to $0.7 million for the first quarter of fiscal 2021.
Financial Condition and Liquidity
Our financial condition remained strong at October 30, 2021 as cash and cash equivalents totaled $20.7 million as compared to $23.5 million at July 31, 2021. Our working capital increased from $58.0 million at July 31, 2021 to $60.2 million at October 30, 2021.
We currently have two lines of credit totaling $6.75 million, all of which were fully available at October 30, 2021. 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 2022. Our $5.0 million line of credit, which also expires in January 2022, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.
Net cash used in operating activities for the first quarter of fiscal 2022 amounted to $4.8 million. Net earnings, as adjusted for depreciation, contributed approximately $2.5 million of cash. Inventory used approximately $1.3 million of cash and accounts receivable used approximately $7.1 million of cash as first quarter sales outpaced customer payments.
Net cash provided by investing activities for the first quarter of fiscal 2022 totaled approximately $2.2 million, primarily due to the maturity of short-term investments.
Net cash used in financing activities for the first quarter of fiscal 2022 totaled $0.3 million, which was primarily used for dividend payments.
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 the remainder of fiscal 2022.
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) | ||||
(Unaudited) | ||||
October 30, | July 31, | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $20,665 | $23,489 | ||
Equity investments | 6,480 | 6,207 | ||
Debt securities | - | 2,414 | ||
Accounts and notes receivable, net | 23,507 | 16,382 | ||
Inventories, net | 15,593 | 14,326 | ||
Prepaid expenses and other current assets | 710 | 323 | ||
Total current assets | 66,955 | 63,141 | ||
Property and equipment, net | 5,217 | 5,363 | ||
Other assets: | ||||
Deposits | 14 | 14 | ||
Notes receivable | 1,025 | 1,017 | ||
Real estate held for investment | 3,101 | 3,238 | ||
Amounts due from split-dollar life insurance | 2,288 | 2,288 | ||
Trademarks | 2,824 | 2,824 | ||
Total other assets | 9,252 | 9,381 | ||
Total assets | $81,424 | $77,885 | ||
McRae Industries, Inc. and Subsidiaries | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(In thousands, except share data) | ||||
(Unaudited) | ||||
October 30, | July 31, | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $3,245 | $2,714 | ||
Accrued employee benefits | 1,112 | 660 | ||
Accrued payroll and payroll taxes | 435 | 700 | ||
Income tax payable | 1,058 | 236 | ||
Other | 865 | 795 | ||
Total current liabilities | 6,715 | 5,105 | ||
Deferred tax liabilities | 534 | 534 | ||
Total liabilities | 7,249 | 5,639 | ||
Shareholders' equity: | ||||
Common Stock: | ||||
Class A, $1 par value; authorized 5,000,000 shares | 1,893 | 1,893 | ||
Class B, $1 par value; authorized 2,500,000 shares; | 367 | 367 | ||
Retained earnings | 71,915 | 69,986 | ||
Total shareholders' equity | 74,175 | 72,246 | ||
Total liabilities and shareholders' equity | $81,424 | $77,885 | ||
McRae Industries, Inc. and Subsidiaries | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except share data) | ||||
(Unaudited) | ||||
Three Months Ended | ||||
October 30, | October 31, | |||
2021 | 2020 | |||
Net revenues | $27,588 | $18,939 | ||
Cost of revenues | 19,604 | 13,904 | ||
Gross profit | 7,984 | 5,035 | ||
Selling, general and administrative expenses | 5,136 | 4,357 | ||
Operating profit | 2,848 | 678 | ||
Other income | 208 | 50 | ||
Earnings before income taxes | 3,056 | 728 | ||
Provision for income taxes | 834 | 234 | ||
Net earnings | $2,222 | $494 | ||
Earnings per common share: | ||||
Diluted earnings per share: | ||||
Class A | 0.98 | 0.21 | ||
Class B | NA | NA | ||
Weighted average number of common shares outstanding: | ||||
Class A | 1,893,423 | 1,949,583 | ||
Class B | 366,737 | 368,835 | ||
Total | 2,260,160 | 2,318,418 | ||
McRae Industries, Inc. and Subsidiaries | |||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||
(In thousands, except share data) | |||||||
(Unaudited) | |||||||
Common Stock, $1 par value | Accumulated Other | ||||||
Class A | Class B | Comprehensive | Retained | ||||
Shares | Amount | Shares | Amount | Income (Loss) | Earnings | ||
Balance, August 1, 2020 | 1,957,142 | $1,957 | 373,233 | $373 | $0 | $69,487 | |
Stock Buyback | (21,141) | (21) | (3,500) | (4) | (490) | ||
Conversion of Class B | 2,300 | 2 | (2,300) | (2) | - | ||
to Class A Stock | |||||||
Cash Dividend ($0.13 per Class A common stock) | (253) | ||||||
Cash Dividend ($0.13 per Class B common stock) | (48) | ||||||
Net earnings | 494 | ||||||
Balance, October 31, 2020 | 1,938,301 | $1,938 | 367,433 | $367 | $0 | $69,190 | |
Common Stock, $1 par value | Accumulated Other | ||||||
Class A | Class B | Comprehensive | Retained | ||||
Shares | Amount | Shares | Amount | Income (Loss) | Earnings | ||
Balance, July 31, 2021 | 1,893,423 | $1,893 | 366,737 | $367 | $0 | $69,986 | |
Cash Dividend ($0.13 per Class A common stock) | (246) | ||||||
Cash Dividend ($0.13 per Class B common stock) | (47) | ||||||
Net earnings | 2,222 | ||||||
Balance, October 30, 2021 | 1,893,423 | $1,893 | 366,737 | $367 | $0 | $71,915 | |
McRae Industries, Inc. and Subsidiaries | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(In thousands) | ||||
(Unaudited) | ||||
Three Months Ended | ||||
October 30, | October 31, | |||
2021 | 2020 | |||
Net cash used in operating activities | (4,767) | (1,094) | ||
Cash Flows from Investing Activities: | ||||
Proceeds from sale of assets | 200 | 591 | ||
Purchase of land for investment | - | (160) | ||
Capital expenditures | (117) | (98) | ||
Purchase of securities | (246) | (5,118) | ||
Proceeds from sale of securities | 2,400 | 4,855 | ||
Net cash provided by investing activities | 2,237 | 70 | ||
Cash Flows from Financing Activities: | ||||
Repurchase company stock | - | (515) | ||
Dividends paid | (294) | (301) | ||
Net cash used in financing activities | (294) | (816) | ||
Net (Decrease) Increase in Cash and Cash equivalents | (2,824) | (1,840) | ||
Cash and Cash Equivalents at Beginning of Year | 23,489 | 20,959 | ||
Cash and Cash Equivalents at End of Period | $20,665 | $19,119 | ||
SOURCE McRae Industries, Inc.
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