McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE FIRST QUARTER OF FISCAL 2024
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, July
29,
2023 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, July
29,
2023 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 1,896 1,896
issued and outstanding, 1,896,334 and 1,895,949
shares, respectively
Class B, $1 par value; authorized 2,500,000 shares; 364 364
issued and outstanding, 363,826 and 364,211 shares,
respectively
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
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SOURCE McRae Industries, Inc.
