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 29,2022
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
Notes receivable
1,033
1,017
Real estate held for investment
3,036
3,238
Amounts due from split-dollar life insurance
2,288
Trademarks
2,824
Total other assets
9,195
9,381
Total assets
$82,976
$77,885
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
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
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
January 29,
January 30,
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
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
2,309,786
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)
(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
(14,478)
(14)
(696)
0
(320)
(252)
(47)
728
Balance, January 30, 2021
1,923,823
$1,924
366,737
$69,299
Balance, July 31, 2021
1,893,423
$1,893
$69,986
(246)
2,222
Balance, October 30, 2021
$71,915
212
1
(212)
(1)
2,536
Balance, January 29, 2022
1,893,635
$1,894
366,525
$366
$74,158
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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
(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
$24,655
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SOURCE McRae Industries, Inc.
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