McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE FIRST QUARTER OF FISCAL 2024

News provided by

Jan 05, 2024, 08:55 ET

MOUNT GILEAD, N.C., Jan. 5, 2024 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the first quarter of fiscal 2024 of $32,826,000 as compared to $33,783,000 for the first quarter of fiscal 2023. Net earnings for the first quarter of fiscal 2024 amounted to $3,222,000, or $1.43 per diluted Class A common share as compared to $2,857,000, or $1.26 per diluted Class A common share, for the first quarter of fiscal 2023.

FIRST QUARTER FISCAL 2024 COMPARED TO FIRST QUARTER FISCAL 2023

Consolidated net revenues totaled $32.8 million for the first quarter of fiscal 2024 as compared to $33.8 million for the first quarter of fiscal 2023. Sales related to our western/lifestyle boot products for the first quarter of fiscal 2024 totaled $22.0 million as compared to $26.8 million for the first quarter of fiscal 2023. This 18% decrease was seen across most of our western brands. We have seen a slowdown in demand, especially with the independent retailers who, for the most part, were over inventoried during the quarter. Revenues from our work boot products increased approximately 35%, from $7.0 million for the first quarter of fiscal 2023 to $9.4 million for the first quarter of fiscal 2024. This is primarily a result of an increase in military boot sales.

Consolidated gross profit for the first quarter of fiscal 2024 amounted to approximately $9.9 million as compared to $10.3 million for the first quarter of fiscal 2023. However, gross profit as a percentage of net revenues remained relatively consistent at 30.2% for the first quarter of fiscal 2024 as compared to 30.5% for the first quarter of fiscal 2023. Gross profit was positively affected by $1.6 million from the sale of real estate held for investment.

Consolidated selling, general and administrative ("SG&A") expenses remained relatively consistent at approximately $6.0 million for the first quarter of fiscal 2024 and fiscal 2023.

As a result of the above, the consolidated operating profit for the first quarter of fiscal 2024 amounted to $3.9 million as compared to $4.2 million for the first quarter of fiscal 2023.

Financial Condition and Liquidity

Our financial condition remained strong at October 28, 2023 as cash and cash equivalents totaled $24.0 million as compared to $18.3 million at July 29, 2023. Our working capital increased from $75.8 million at July 29, 2023 to $78.9 million at October 28, 2023.

We currently have two lines of credit totaling $6.75 million, all of which were fully available at October 28, 2023. 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 2025. Our $5.0 million line of credit, which also expires in January 2025, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.

Net cash provided in operating activities for the first quarter of fiscal 2024 amounted to $7.2 million. Net earnings, adjusted for depreciation and other non-cash items, contributed approximately $2.0 million of cash. Inventory and accrued income taxes provided approximately $4.6 million of cash.

Net cash used in investing activities for the first quarter of fiscal 2024 totaled approximately $1.2 million primarily due to $8.9 million in security purchases, offset by $6.2 million in security sales. Additionally, as mentioned in the Company's latest Annual Report, $1.7 million in cash was provided by the sale of land through our affiliate American Mortgage Investment Company (AMIC).

Net cash used in financing activities for the first quarter of fiscal 2024 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 2024.

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 28, 2023	July 29, 2023
	October 28, 2023	July 29, 2023
ASSETS
Current assets:

Cash and cash equivalents	$24,001	$18,329

Equity investments	6,209	6,459

Debt securities	17,882	15,047

Accounts receivable, net	19,435	19,880

Inventories, net	18,045	21,914

Income tax receivable	-	370

Prepaid expenses and other current assets	661	317

Total current assets	86,233	82,316

Property and equipment, net	4,829	4,917

Other assets:

Deposits	14	14

Right to Use Asset	2,240	2,362

Real estate held for investment	2,964	3,036

Trademarks	2,824	2,824

Total other assets	8,042	8,236

Total assets	$99,104	$95,469

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

	October 28, 2023	July 29, 2023
	October 28, 2023	July 29, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

Accounts payable	$2,801	$2,122

Accrued employee benefits	2,168	1,783

Accrued payroll and payroll taxes	630	1,293

Lease liability	429	429

Income tax payable	366	-

Other	962	878

Total current liabilities	7,356	6,505

Lease liability	1,811	1,933

Deferred tax liabilities	114	114

Total liabilities	9,281	8,552

Shareholders' equity:
Common Stock:
Class A, $1 par value; authorized 5,000,000 shares issued and outstanding, 1,896,334 and 1,895,949 shares, respectively	1,896	1,896

Class B, $1 par value; authorized 2,500,000 shares; issued and outstanding, 363,826 and 364,211 shares, respectively	364	364

Retained earnings	87,563	84,657

Total shareholders' equity	89,823	86,917

Total liabilities and shareholders' equity	$99,104	$95,469

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)

	Three Months Ended
	October 28,	October 29,
	2023	2022

Net revenues	$32,826	$33,783

Cost of revenues	22,917	23,489

Gross profit	9,909	10,294

Selling, general and administrative expenses	6,003	6,046

Operating profit	3,906	4,248

Other income	64	(189)

Earnings before income taxes	3,970	4,059

Provision for income taxes	748	1,202

Net earnings	$3,222	$2,857



Earnings per common share:

Diluted earnings per share:
Class A	1.43	1.26
Class B	NA	NA

Weighted average number of common shares outstanding:
Class A	1,896,219	1,895,035
Class B	363,941	365,125
Total	2,260,160	2,260,160

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, July 30, 2022	1,895,035	$1,895	365,125	$365	$0	$78,989

Cash Dividend ($0.14 per Class A common stock)						(265)

Cash Dividend ($0.14 per Class B common stock)						(51)

Net earnings						2,857
Balance, October 29, 2022	1,895,035	$1,895	365,125	$365	$0	$81,530

	Common Stock, $1 par value				Accumulated Other
	Class A		Class B		Comprehensive	Retained
	Shares	Amount	Shares	Amount	Income (Loss)	Earnings
Balance, July 29, 2023	1,895,949	$1,896	364,211	$364	$0	$84,657

Conversion of Class B	385	-	(385)	-
to Class A Stock

Cash Dividend ($0.14 per Class A common stock)						(265)

Cash Dividend ($0.14 per Class B common stock)						(51)

Net earnings						3,222
Balance, October 28, 2023	1,896,334	$1,896	363,826	$364	$0	$87,563

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Three Months Ended
	October 28,	October 29,
	2023	2022

Cash Flows from Operating Activities:

Net earnings	$3,222	$2,857

Adjustments to reconcile net earnings to net cash used in operating activities	3,928	(4,036)

Net cash used in operating activities	7,150	(1,179)

Cash Flows from Investing Activities:

Proceeds from sale of land	1,660	-

Capital expenditures	(78)	(374)

Purchase of securities	(8,926)	(103)

Proceeds from sale of securities	6,182	-

Net cash provided by investing activities	(1,162)	(477)

Cash Flows from Financing Activities:

Dividends paid	(316)	(316)

Net cash used in financing activities	(316)	(316)

Net (Decrease) Increase in Cash and Cash equivalents	5,672	(1,972)

Cash and Cash Equivalents at Beginning of Year	18,329	15,315

Cash and Cash Equivalents at End of Period	$24,001	$13,343