McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 2024

Rhea-AI Summary

McRae Industries, Inc. reported a decrease in net revenues for the second quarter and first six months of fiscal 2024 compared to the same periods in fiscal 2023. Despite this, the company saw an increase in gross profit percentage and operating profit margin. The company also signed a purchase sale agreement to sell land for $2.65 million. Financially, the company's cash and working capital remained strong, with available credit lines expected to meet capital requirements for the rest of fiscal 2024.

Positive

• Consolidated net revenues decreased for the second quarter and first six months of fiscal 2024 compared to the same periods in fiscal 2023.
• Gross profit percentage increased from the second quarter of fiscal 2023 to the second quarter of fiscal 2024.
• Operating profit margin decreased for the second quarter of fiscal 2024 compared to the second quarter of fiscal 2023.
• The company signed a purchase sale agreement to sell land for $2.65 million.
• Cash and working capital remained strong, with available credit lines expected to meet capital requirements for the rest of fiscal 2024.

Negative

• Decrease in net revenues for the second quarter and first six months of fiscal 2024 compared to the same periods in fiscal 2023.
• Softened demand for western and lifestyle products resulted in missed sales due to inventory shortages.
• Net earnings and operating profit margin decreased for the first six months of fiscal 2024 compared to the first six months of fiscal 2023.

MOUNT GILEAD, N.C., March 21, 2024 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets:  MCRAA and MCRAB) reported consolidated net revenues for the second quarter of fiscal 2024 of $25,815,000 as compared to $30,769,000 for the second quarter of fiscal 2023.  Net earnings for the second quarter of fiscal 2024 amounted to $1,636,000, or $.72 per diluted Class A common share as compared to $1,729,000, or $0.76 per diluted Class A common share, for the second quarter of fiscal 2023.

Consolidated net revenues for the first six months of fiscal 2024 totaled $58,641,000 as compared to $64,552,000 for the first six months of fiscal 2023.  Net earnings for the first six months of fiscal 2024 amounted to $4,858,000, or $2.15 per diluted Class A common share, as compared to net earnings of $4,586,000, or $2.02 per diluted Class A common share, for the first six months of fiscal 2023.

SECOND QUARTER FISCAL 2024 COMPARED TO SECOND QUARTER FISCAL 2023

Consolidated net revenues totaled $25.8 million for the second quarter of fiscal 2024 as compared to $30.8 million for the second quarter of fiscal 2023.  Sales related to our western/lifestyle boot products for the second quarter of fiscal 2024 totaled $18.2 million as compared to $22.8 million for the second quarter of fiscal 2023.  This decrease in net revenues was spread across several western product lines and offset by an increase in our Dingo fashion brand.  Revenues from our work boot products decreased from $8.2 million for the second quarter of fiscal 2023 to $7.8 million for the second quarter of fiscal 2024.  This was primarily a result of decreased sales for our Dan Post work boots.

Consolidated gross profit for the second quarter of fiscal 2024 amounted to approximately $7.0 million as compared to $8.0 million for the second quarter of fiscal 2023.  However, gross profit as a percentage of net revenues was up from 25.9% for the second quarter of fiscal 2023 to 27.1% for the second quarter of fiscal 2024.  This is primarily because of increased margins on military boot sales driven by increased efficiency in our manufacturing facility, as well as newer military boot contracts with updated pricing.

Consolidated selling, general and administrative expenses totaled approximately $5.6 million for the second quarter of fiscal 2024 as compared to $6.1 million for the second quarter of fiscal 2023.  This decrease resulted primarily from decreased sales commissions.

As a result of the above, the consolidated operating profit for the second quarter of fiscal 2024 amounted to $1.4 million as compared to $1.8 million for the second quarter of fiscal 2023.

FIRST SIX MONTHS FISCAL 2024 COMPARED TO FIRST SIX MONTHS FISCAL 2023

Consolidated net revenues for the first six months of fiscal 2024 totaled $58.6 million as compared to $64.6 million for the first six months of fiscal 2023.  Our western and lifestyle product sales totaled $40.2 million for the first six months of fiscal 2024 as compared to $49.5 million for the first six months of fiscal 2023.  While demand for the Laredo, Dan Post, and Eldorado brands has softened, we also missed some sales during the first six months of our fiscal year due to inventory shortages on select styles.  Net revenues from our work boot business increased from $15.1 million for the first six months of fiscal 2023 to $17.2 million for the first six months of fiscal 2024.  This was primarily a result of increased military boot sales.

Consolidated gross profit totaled $16.9 million, or 28.8%, for the first six months of fiscal 2024 as compared to $18.3 million, or 28.3%, for the first six months of fiscal 2023.  This is primarily due to the improved margins on military boot sales as discussed above.

Consolidated selling, general and administrative expenses totaled approximately $11.6 million for the first six months of fiscal 2024 as compared to $12.2 million for the first six months of fiscal 2023.  This decrease is mainly attributable to lower commissions because of the decrease in sales.

As a result of the above, the consolidated operating profit amounted to $5.3 million for the first six months of fiscal 2024 as compared to $6.1 million for the first six months of fiscal 2023.

On December 23, 2023, the company, through our affiliate American Mortgage and Investment Company and wholly owned subsidiary Hoke Development Company, signed a purchase sale agreement to sell approximately 262 acres in Berkeley Country Club located in Berkeley County, South Carolina to Berkeley Conservation Group LLC.  The terms of the agreement provide for a sales price of $2,650,000 and a maximum due diligence period of 180 days prior to closing.

Financial Condition and Liquidity

Our financial condition remained strong as cash and cash equivalents remained consistent at $18.3 million for January 27, 2024 and July 29, 2023.  Our working capital increased from $75.8 million at July 29, 2023 to $79.0 million at January 27, 2024.

We currently have two lines of credit totaling $6.75 million, all of which was fully available at January 27, 2024.  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.

For the first six months of fiscal 2024, operating activities provided approximately $8.4 million of cash.  Net earnings contributed approximately $4.8 million of cash.  Adjustments to reconcile net earnings to net cash provided in operating activities totaled approximately $3.6 million.  These adjustments were driven significantly by decreased inventory and accounts receivable.

Net cash used by investing activities totaled approximately $6.5 million, primarily due to the purchase and sale of securities.

Net cash used in financing activities totaled $2.0 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 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: uncertainties associated with COVID-19 or coronavirus, including its possible effects on our operations, supply chain, and the demand for our products and services, our ability to complete the sale of our properties under contract for sale, 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 27, 2024		July 29, 2023
ASSETS
Current assets:
Cash and cash equivalents		$18,274		$18,329
Equity investments		6,713		6,459
Debt securities		23,531		15,047
Accounts receivable, net		16,170		19,880
Inventories, net		19,797		21,914
Income tax receivable		138		370
Prepaid expenses and other current assets		598		317
Total current assets		85,221		82,316
Property and equipment, net		4,734		4,917
Other assets:
Deposits		13		14
Right to Use Asset		2,136		2,362
Real estate held for investment		2,848		3,036
Trademarks		2,824		2,824
Total other assets		7,821		8,236
Total assets		$97,776		$95,469

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
		January 27, 2024		July 29, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$3,301		$2,122
Accrued employee benefits		566		1,783
Accrued payroll and payroll taxes		948		1,293
Lease liability		429		429
Other		945		878
Total current liabilities		6,189		6,505
Lease liability		1,707		1,933
Deferred tax liabilities		114		114
Total liabilities		8,010		8,552
Shareholders' equity:
Common Stock:
Class A, $1 par value; authorized 5,000,000 shares    issued and outstanding, 1,896,334 and 1,895,949    shares, respectively		1,896		1,896
Class B, $1 par value; authorized 2,500,000 shares;    issued and outstanding, 363,826 and 364,211 shares,    respectively		364		364
Retained earnings		87,506		84,657
Total shareholders' equity		89,766		86,917
Total liabilities and shareholders' equity		$97,776		$95,469

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
	Three Months Ended				Six Months Ended
	January 27,		January 28,		January 27,		January 28,
	2024		2023		2024		2023
Net revenues	$25,815		$30,769		$58,641		$64,552
Cost of revenues	18,816		22,788		41,733		46,277
Gross profit	6,999		7,981		16,908		18,275
Selling, general and administrative expenses	5,580		6,134		11,583		12,180
Operating profit	1,419		1,847		5,325		6,095
Other income	852		456		916		267
Earnings before income taxes	2,271		2,303		6,241		6,362
Provision for income taxes	635		574		1,383		1,776
Net earnings	$1,636		$1,729		$4,858		$4,586
Earnings per common share:
Diluted earnings per share:
Class A	0.72		0.76		2.15		2.03
Class B	NA		NA		NA		NA
Weighted average number of common shares outstanding:
Class A	1,896,334		1,895,062		1,896,277		1,895,049
Class B	363,826		365,098		363,883		365,111
Total	2,260,160		2,260,160		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
Conversion of Class B		100	-	(100)	-		-
to Class A Stock
Cash Dividend ($0.64 per  Class A common stock)							(1,212)
Cash Dividend ($0.64 per Class B common stock)							(233)
Net earnings							1,729
Balance, January 28, 2023		1,895,135	$1,895	365,025	$365	$0	$81,814
		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
Cash Dividend ($0.64 per  Class A common stock)							(1,421)
Cash Dividend ($0.64 per Class B common stock)							(272)
Net earnings							1,636
Balance, January 27, 2024		1,896,334	$1,896	363,826	$364	$0	$87,506

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Six Months Ended
		January 27,		January 28,
		2024		2023
Cash Flows from Operating Activities:
Net earnings		$4,858		$4,586
Adjustments to reconcile net earnings to net cash used in operating activities		3,584		(1,960)
Net cash provided by operating activities		8,442		2,626
Cash Flows from Investing Activities:
Proceeds from sale of land		1,985		-
Capital expenditures		(143)		(594)
Purchase of securities		(19,011)		(246)
Proceeds from sale of securities		10,681		10
Net cash used in investing activities		(6,488)		(830)
Cash Flows from Financing Activities:
Dividends paid		(2,009)		(1,761)
Net cash used in financing activities		(2,009)		(1,761)
Net (Decrease) Increase in Cash and Cash equivalents		(55)		35
Cash and Cash Equivalents at Beginning of Year		18,329		15,315
Cash and Cash Equivalents at End of Period		$18,274		$15,350

 

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SOURCE McRae Industries, Inc.

FAQ

What were McRae Industries, Inc.'s consolidated net revenues for the second quarter of fiscal 2024?

McRae Industries, Inc.'s consolidated net revenues for the second quarter of fiscal 2024 were $25,815,000.

What was the net earnings for the second quarter of fiscal 2024?

The net earnings for the second quarter of fiscal 2024 were $1,636,000, or $.72 per diluted Class A common share.

How much did McRae Industries, Inc. sell approximately 262 acres in Berkeley Country Club for?

McRae Industries, Inc. sold approximately 262 acres in Berkeley Country Club for a sales price of $2,650,000.

Did McRae Industries, Inc.'s working capital increase or decrease from July 29, 2023, to January 27, 2024?

McRae Industries, Inc.'s working capital increased from $75.8 million at July 29, 2023, to $79.0 million at January 27, 2024.