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


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


2,288






Trademarks


2,824


2,824






Total other assets


9,252


9,381






Total assets


$81,424


$77,885

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)








October 30,
2021


July 31,
2021


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


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


1,893






Class B, $1 par value; authorized 2,500,000 shares;
   issued and outstanding, 366,737 and 366,737 shares,
   respectively


367


367






Retained earnings


71,915


69,986






Total shareholders' equity


74,175


72,246






Total liabilities and shareholders' equity


$81,424


$77,885

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)








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


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

 

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



















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

 

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)








Three Months Ended



October 30,


October 31,



2021

2020






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


(246)


(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


(294)


(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


$20,665


$19,119

 

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SOURCE McRae Industries, Inc.