MCRAE INDUSTRIES, INC. 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.
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.
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.
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.
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, | July 31, | |||
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, | July 31, | |||
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 | 1,894 | 1,893 | ||
Class B, $1 par value; authorized 2,500,000 shares; | 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 | ||
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SOURCE McRae Industries, Inc.
