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McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 2022

MOUNT GILEAD, N.C., March 18, 2022 /PRNewswire/ — McRae Industries, Inc. (Pink Sheets:  MCRAA and MCRAB) reported consolidated net revenues for the second quarter of fiscal 2022 of $31,426,000 as compared to $20,239,000 for the second quarter of fiscal 2021.  Net earnings for the second quarter of fiscal 2022 amounted to $2,536,000, or $1.12 per diluted Class A common share as compared to $728,000, or $0.32 per diluted Class A common share, for the second quarter of fiscal 2021.

Consolidated net revenues for the first six months of fiscal 2022 totaled $59,014,000 as compared to $39,178,000 for the first six months of fiscal 2021.  Net earnings for the first six months of fiscal 2022 amounted to $4,758,000, or $2.11 per diluted Class A common share, as compared to net earnings of $1,222,000, or $0.53 per diluted Class A common share, for the first six months of fiscal 2021.

SECOND QUARTER FISCAL 2022 COMPARED TO SECOND QUARTER FISCAL 2021

Consolidated net revenues totaled $31.4 million for the second quarter of fiscal 2022 as compared to $20.2 million for the second quarter of fiscal 2021.  Sales related to our western/lifestyle boot products for the second quarter of fiscal 2022 totaled $23.5 million as compared to $13.7 million for the second quarter of fiscal 2021.  This increase in net revenues was seen across the board for all product lines, as the demand for western boots continues to grow because of fashion and lifestyle influences in the market place.  Revenues from our work boot products increased from $6.5 million for the second quarter of fiscal 2021 to $7.0 million for the second quarter of fiscal 2022.  This was primarily a result of increased military and Dan Post work boot sales.

Consolidated gross profit for the second quarter of fiscal 2022 amounted to approximately $9.2 million as compared to $5.6 million for the second quarter of fiscal 2021.  Gross profit, as a percentage of net revenues, was up from 27.5% for the second quarter of fiscal 2021 to 29.1% for the second quarter of fiscal 2022.  This is primarily due to our lower margin military boot sales making up a smaller percentage of total sales, in addition to better margins on closeout sales.

Consolidated selling, general and administrative expenses totaled approximately $5.7 million for the second quarter of fiscal 2022 as compared to $4.8 million for the second quarter of fiscal 2021.  This increase resulted primarily from increased commissions.

As a result of the above, the consolidated operating profit for the second quarter of fiscal 2022 amounted to $3.43 million as compared to $0.81 million for the second quarter of fiscal 2021.

FIRST SIX MONTHS FISCAL 2022 COMPARED TO FIRST SIX MONTHS FISCAL 2021

Consolidated net revenues for the first six months of fiscal 2022 totaled $59.0 million as compared to $39.2 million for the first six months of fiscal 2021.  Our western and lifestyle product sales totaled $43.4 million for the first six months of fiscal 2022 as compared to $25.8 million for the first six months of fiscal 2021.  Consistent with the quarter, this increase in net revenues was seen across the board for all product lines.  Net revenues from our work boot business increased from $13.4 million for the first six months of fiscal 2021 to $14.2 million for the first six months of fiscal 2022.  This increase resulted primarily from an increase in our Dan Post work boot sales.

Consolidated gross profit totaled $17.1 million, or 29.0%, for the first six months of fiscal 2022 as compared to $10.6 million, or 27.1%, for the first six months of fiscal 2021.  Consistent with the quarter, this is primarily due to our lower margin military boot sales making up a smaller percentage of total sales, in addition to better margins on closeout sales.

Consolidated selling, general and administrative expenses totaled approximately $10.9 million for the first six months of fiscal 2022 as compared to $9.1 million for the first six months of fiscal 2021.  This increase resulted primarily from increased commissions.

As a result of the above, the consolidated operating profit amounted to $6.3 million for the first six months of fiscal 2022 as compared to $1.5 million for the first six months of fiscal 2021.

Financial Condition and Liquidity

Our financial condition remained strong at January 29, 2022 as cash and cash equivalents totaled $15.1 million as compared to $23.5 million at July 31, 2021.  Our working capital increased from $58.0 million at July 31, 2021 to $62.7 million at January 29, 2022.

We currently have two lines of credit totaling $6.75 million, all of which was fully available at January 29, 2022.  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 2023.  Our $5.0 million line of credit, which also expires in January 2023, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.

For the first six months of fiscal 2022, operating activities used approximately $10.0 million of cash.  Net earnings, as adjusted for depreciation, contributed approximately $5.3 million of cash.  Increased inventory, accounts receivable, and other assets used approximately $16.0 million of cash.  Decreased accounts payable and other accrued liabilities provided approximately $0.9 million of cash.

Net cash provided by investing activities totaled approximately $2.2 million.  The sale of securities offset by the purchase of securities provided approximately $1.9 million and the sale of land provided approximately $0.6 million.

Net cash used in financing activities totaled $0.6 million, which was used primarily 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: uncertainties associated with COVID-19 or coronavirus, including its possible effects on our operations, supply chain, and the demand for our products and services, 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)








January 29,

2022


July 31,

2021


ASSETS





Current assets: 










Cash and cash equivalents


$15,113


$23,489






Equity investments


6,544


6,207






Debt securities



2,414






Accounts and notes receivable, net


29,765


16,382






Inventories, net


16,757


14,326






Prepaid expenses and other current assets


550


323






Total current assets


68,729


63,141






Property and equipment, net


5,052


5,363






Other assets:










Deposits


14


14






Notes receivable


1,033


1,017






Real estate held for investment


3,036


3,238






Amounts due from split-dollar life insurance


2,288


2,288






Trademarks


2,824


2,824






Total other assets


9,195


9,381






Total assets


$82,976


$77,885

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)








January 29,

2022


July 31,

2021


LIABILITIES AND SHAREHOLDERS’ EQUITY





Current liabilities: 










Accounts payable


$3,126


$2,714






Accrued employee benefits


988


660






Accrued payroll and payroll taxes


802


700






Income tax payable


296


236






Other


812


795






Total current liabilities


6,024


5,105






Deferred tax liabilities


534


534






Total liabilities


6,558


5,639






Shareholders’ equity:





Common Stock:





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

   issued and outstanding, 1,893,635 and 1,893,423

   shares, respectively


1,894


1,893






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

   issued and outstanding, 366,525 and 366,737 shares,

   respectively


366


367






Retained earnings


74,158


69,986






Total shareholders’ equity


76,418


72,246






Total liabilities and shareholders’ equity


$82,976


$77,885

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)










Three Months Ended


Six Months Ended


January 29,


January 30,


January 29,


January 30,

2022

2021

2022

2021









Net revenues

$31,426


$20,239


$59,014


$39,178









Cost of revenues

22,273


14,672


41,877


28,575









Gross profit

9,153


5,567


17,137


10,603









Selling, general and administrative expenses

5,723


4,762


10,859


9,120









Operating profit 

3,430


805


6,278


1,483









Other income

(21)


241


187


291









Earnings before income taxes

3,409


1,046


6,465


1,774









Provision for income taxes

873


318


1,707


552









Net earnings 

$2,536


$728


$4,758


$1,222

























Earnings per common share:
















     Diluted earnings per share:








        Class A

1.12


0.32


2.11


0.53

        Class B

NA


NA


NA


NA









Weighted average number of common shares outstanding:








       Class A

1,893,486


1,933,860


1,893,454


1,941,721

       Class B

366,674


367,295


366,706


368,065

        Total

2,260,160


2,301,155


2,260,160


2,309,786

 

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









Stock Buyback


(14,478)

(14)

(696)

0


(320)









Cash Dividend ($0.13 per  Class A common stock)







(252)









Cash Dividend ($0.13 per Class B common stock)







(47)









Net earnings







728

Balance, January 30, 2021


1,923,823

$1,924

366,737

$367

$0

$69,299



















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









Conversion of Class B


212

1

(212)

(1)


   to Class A Stock
















Cash Dividend ($0.13 per  Class A common stock)







(246)









Cash Dividend ($0.13 per Class B common stock)







(47)









Net earnings







2,536

Balance, January 29, 2022


1,893,635

$1,894

366,525

$366

$0

$74,158

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)








Six Months Ended



January 29,


January 30,



2022

2021






Net cash used in operating activities


(9,998)


140






Cash Flows from Investing Activities:










Proceeds from sale of assets


564


635






Purchase of land for investment



(160)






Capital expenditures


(211)


(202)






Purchase of securities


(687)


(5,118)






Proceeds from sale of securities


2,542


9,852






Net cash provided by investing activities


2,208


5,007






Cash Flows from Financing Activities:










Repurchase company stock



(850)






Dividends paid


(586)


(601)






Net cash used in financing activities


(586)


(1,451)






Net (Decrease) Increase in Cash and Cash equivalents


(8,376)


3,696






Cash and Cash Equivalents at Beginning of Year


23,489


20,959






Cash and Cash Equivalents at End of Period


$15,113


$24,655

 

Cision View original content:https://www.prnewswire.com/news-releases/mcrae-industries-inc-reports-earnings-for-the-second-quarter-and-first-six-months-of-fiscal-2022-301505992.html

SOURCE McRae Industries, Inc.

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