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 30,2021
July 31,2021
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
Notes receivable
1,025
1,017
Real estate held for investment
3,101
3,238
Amounts due from split-dollar life insurance
2,288
Trademarks
2,824
Total other assets
9,252
9,381
Total assets
$81,424
$77,885
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
Total liabilities
7,249
5,639
Shareholders’ equity:
Common Stock:
Class A, $1 par value; authorized 5,000,000 shares issued and outstanding, 1,893,423 and 1,893,423 shares, respectively
1,893
Class B, $1 par value; authorized 2,500,000 shares; issued and outstanding, 366,737 and 366,737 shares, respectively
367
Retained earnings
71,915
69,986
Total shareholders’ equity
74,175
72,246
Total liabilities and shareholders’ equity
CONSOLIDATED STATEMENTS OF OPERATIONS
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
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
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Common Stock, $1 par value
Accumulated Other
Class A
Class B
Comprehensive
Retained
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
$69,190
Balance, July 31, 2021
$1,893
$69,986
(246)
(47)
2,222
Balance, October 30, 2021
$71,915
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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
(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
(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
$19,119
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SOURCE McRae Industries, Inc.
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