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

Rhea-AI Summary

McRae Industries (MCRAA) reported their third-quarter and nine-month fiscal 2024 earnings. For Q3 2024, net revenues were $29.4M, down from $31.5M in Q3 2023. Net earnings were $2.05M ($0.91/share), slightly decreased from $2.08M ($0.92/share) in Q3 2023. For the first nine months, net revenues were $88.1M, down from $96.1M in the same period in 2023. However, net earnings improved to $6.91M ($3.06/share) from $6.67M ($2.94/share). The company cited increased military boot sales but saw a decline in western boot sales.

The company's financial condition remained robust with $19.6M in cash and equivalents and increased working capital from $75.8M to $80.1M. Operating activities provided $8.4M in cash, with $4.8M used in investing and $2.3M in financing activities. Available credit lines totaled $6.75M, with no current usage. McRae is confident that their current assets will meet capital requirements for the rest of fiscal 2024.

Positive

• Net earnings increased to $6.91M for the first nine months of fiscal 2024 from $6.67M in the same period in 2023.
• Earnings per share (EPS) for the first nine months of fiscal 2024 improved to $3.06 from $2.94 in 2023.
• Increased sales in work boot products, especially military boots, contributed positively to revenue.
• Decreased selling, general, and administrative expenses, primarily due to reduced commissions and employee expenses.
• Strong financial condition with cash and cash equivalents totaling $19.6M.
• Increased working capital from $75.8M to $80.1M.
• Operational activities provided $8.4M in cash for the first nine months of fiscal 2024.
• Completed the sale of 262 acres in Berkeley Country Club for $2.65M, contributing to liquidity.

Negative

• Consolidated net revenues for Q3 2024 decreased to $29.4M from $31.5M in Q3 2023.
• Net earnings for Q3 2024 slightly decreased to $2.05M from $2.08M in Q3 2023.
• Consolidated net revenues for the first nine months of fiscal 2024 dropped to $88.1M from $96.1M in the same period in 2023.
• Gross profit for Q3 2024 fell to $8.0M from $8.7M in Q3 2023.
• Decreased sales in western/lifestyle boot products both in Q3 2024 and for the first nine months of fiscal 2024.
• Operating profit for Q3 2024 dropped to $2.3M from $2.8M in Q3 2023.
• Net cash used in investing activities totaled $4.8M, primarily due to security purchases.
• Net cash used in financing activities was $2.3M, mainly for dividend payments.

MOUNT GILEAD, N.C., June 12, 2024 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the third quarter of fiscal 2024 of $29,436,000 as compared to $31,508,000 for the third quarter of fiscal 2023. Net earnings for the third quarter of fiscal 2024 amounted to $2,051,000, or $0.91 per diluted Class A common share as compared to $2,084,000, or $0.92 per diluted Class A common share, for the third quarter of fiscal 2023.

Consolidated net revenues for the first nine months of fiscal 2024 totaled $88,077,000 as compared to $96,060,000 for the first nine months of fiscal 2023. Net earnings for the first nine months of fiscal 2024 amounted to $6,909,000, or $3.06 per diluted Class A common share, as compared to net earnings of $6,670,000, or $2.94 per diluted Class A common share, for the first nine months of fiscal 2023.

THIRD QUARTER FISCAL 2024 COMPARED TO THIRD QUARTER FISCAL 2023

Consolidated net revenues totaled $29.4 million for the third quarter of fiscal 2024 as compared to $31.5 million for the third quarter of fiscal 2023. Sales related to our western/lifestyle boot products for the third quarter of fiscal 2024 totaled $18.9 million as compared to $23.2 million for the third 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 increased from $8.7 million for the third quarter of fiscal 2023 to $10.9 million for the third quarter of fiscal 2024. This was primarily a result of increased military boot sales.

Consolidated gross profit for the third quarter of fiscal 2024 amounted to approximately $8.0 million as compared to $8.7 million for the third quarter of fiscal 2023. Gross profit, as a percentage of net revenues, remained relatively consistent at 27.7% for the third quarter of fiscal 2023 and 27.2% for the third quarter of fiscal 2024.

Consolidated selling, general and administrative expenses totaled approximately $5.7 million for the third quarter of fiscal 2024 as compared to $5.9 million for the third quarter of fiscal 2023. This decrease resulted primarily from decreased commissions and employee related expenses.

As a result of the above, the consolidated operating profit for the third quarter of fiscal 2024 amounted to $2.3 million as compared to $2.8 million for the third quarter of fiscal 2023.

FIRST NINE MONTHS FISCAL 2024 COMPARED TO FIRST NINE MONTHS FISCAL 2023

Consolidated net revenues for the first nine months of fiscal 2024 totaled $88.1 million as compared to $96.1 million for the first nine months of fiscal 2023. Our western and lifestyle product sales totaled $59.1 million for the first nine months of fiscal 2024 as compared to $72.7 million for the first nine months of fiscal 2023. Net revenues from our work boot business increased from $23.8 million for the first nine months of fiscal 2023 to $28.1 million for the first nine months of fiscal 2024. This was primarily a result of increased military boot sales offset by decreased Dan Post work boot sales.

Consolidated gross profit totaled $24.9 million, or 28.3%, for the first nine months of fiscal 2024 as compared to $27.0 million, or 28.1%, for the first nine months of fiscal 2023. 

Consolidated selling, general and administrative expenses totaled approximately $17.3 million for the first nine months of fiscal 2024 as compared to $18.1 million for the first nine months of fiscal 2023. This decrease resulted primarily from decreased commissions and employee related expenses.

As a result of the above, the consolidated operating profit amounted to $7.6 million for the first nine months of fiscal 2024 as compared to $8.9 million for the first nine months of fiscal 2023.

On May 17, 2024, the company, through our affiliate American Mortgage and Investment Company and wholly owned subsidiary Hoke Development Company, closed on the sale of approximately 262 acres in Berkeley Country Club located in Berkeley County, South Carolina to Berkeley Conservation Group LLC for a sales price of $2,650,000.

Financial Condition and Liquidity

Our financial condition remained strong at April 27, 2024 as cash and cash equivalents totaled $19.6 million as compared to $18.3 million at July 29, 2023. Our working capital increased from $75.8 million at July 29, 2023 to $80.1 million at April 27, 2024.

We currently have two lines of credit totaling $6.75 million, all of which was fully available at April 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 nine months of fiscal 2024, operating activities provided approximately $8.4 million of cash. Net earnings, as adjusted for depreciation and other non-cash items, contributed approximately $5.0 million of cash. Increased employee benefits and other payables used approximately $1.4 million of cash. Decreased accounts receivable and inventory provided approximately $4.0 million of cash.

Net cash used by investing activities totaled approximately $4.8 million, primarily due to the purchase of securities, offset by the sale of land and securities.

Net cash used in financing activities totaled $2.3 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: 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)
		April 27, 2024		July 29, 2023
ASSETS
Current assets:
Cash and cash equivalents		$19,632		$18,329
Equity investments		6,803		6,459
Debt securities		21,150		15,047
Accounts receivable, net		17,332		19,880
Inventories, net		20,492		21,914
Income tax receivable		19		370
Prepaid expenses and other current assets		381		317
Total current assets		85,809		82,316
Property and equipment, net		5,182		4,917
Other assets:
Deposits		14		14
Right to Use Asset		2,031		2,362
Real estate held for investment		3,019		3,036
Trademarks		2,824		2,824
Total other assets		7,888		8,236
Total assets		$98,879		$95,469

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
		April 27, 2024		July 29, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$2,575		$2,122
Accrued employee benefits		756		1,783
Accrued payroll and payroll taxes		923		1,293
Lease liability		429		429
Other		979		878
Total current liabilities		5,662		6,505
Lease liability		1,602		1,933
Deferred tax liabilities		114		114
Total liabilities		7,378		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		89,241		84,657
Total shareholders' equity		91,501		86,917
Total liabilities and shareholders' equity		$98,879		$95,469

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
	Three Months Ended				Nine Months Ended
	April 27,		April 29,		April 27,		April 29,
	2024		2023		2024		2023
Net revenues	$29,436		$31,508		$88,077		$96,060
Cost of revenues	21,427		22,769		63,160		69,046
Gross profit	8,009		8,739		24,917		27,014
Selling, general and administrative expenses	5,729		5,949		17,313		18,129
Operating profit	2,280		2,790		7,604		8,885
Other income	533		150		1,450		417
Earnings before income taxes	2,813		2,940		9,054		9,302
Provision for income taxes	762		856		2,145		2,632
Net earnings	$2,051		$2,084		$6,909		$6,670
Earnings per common share:
Diluted earnings per share:
Class A	0.91		0.92		3.06		2.94
Class B	NA		NA		NA		NA
Weighted average number of common shares outstanding:
Class A	1,896,334		1,895,656		1,896,296		1,895,251
Class B	363,826		364,504		363,864		364,909
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
Conversion of Class B		600	1	(600)	(1)		-
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							2,084
Balance, April 29, 2023		1,895,735	$1,896	364,425	$364	$0	$83,582
		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
Cash Dividend ($0.14 per  Class A common stock)							(265)
Cash Dividend ($0.14 per Class B common stock)							(51)
Net earnings							2,051
Balance, April 27, 2024		1,896,334	$1,896	363,826	$364	$0	$89,241

 

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Nine Months Ended
		April 27,		April 29,
		2024		2023
Cash Flows from Operating Activities:
Net earnings		$6,909		$6,670
Adjustments to reconcile net earnings to net cash used in operating activities		1,509		(34)
Net cash provided by operating activities		8,418		6,636
Cash Flows from Investing Activities:
Proceeds from sale of land		1,985		-
Capital expenditures		(937)		(702)
Purchase of securities		(21,519)		(10,608)
Proceeds from sale of securities		15,681		2,535
Net cash used in investing activities		(4,790)		(8,775)
Cash Flows from Financing Activities:
Dividends paid		(2,325)		(2,077)
Net cash used in financing activities		(2,325)		(2,077)
Net (Decrease) Increase in Cash and Cash equivalents		1,303		(4,217)
Cash and Cash Equivalents at Beginning of Year		18,329		15,315
Cash and Cash Equivalents at End of Period		$19,632		$11,098

 

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SOURCE McRae Industries, Inc.

FAQ

What were McRae Industries' earnings for Q3 2024?

McRae Industries reported net earnings of $2.05M for Q3 2024, or $0.91 per diluted Class A common share.

How did McRae Industries' net revenues compare between Q3 2023 and Q3 2024?

Net revenues for Q3 2024 were $29.4M, down from $31.5M in Q3 2023.

What were McRae Industries' net revenues for the first nine months of fiscal 2024?

McRae Industries reported net revenues of $88.1M for the first nine months of fiscal 2024.

How did McRae Industries' earnings per share change in the first nine months of fiscal 2024?

Earnings per share increased to $3.06 for the first nine months of fiscal 2024 from $2.94 in the same period in 2023.

What was the key factor for increased work boot sales in Q3 2024 for McRae Industries?

The key factor for increased work boot sales was higher military boot sales.

How much did McRae Industries' operating activities contribute to cash in the first nine months of fiscal 2024?

Operating activities provided approximately $8.4M of cash during the first nine months of fiscal 2024.

What is McRae Industries’ current cash and cash equivalents as of April 27, 2024?

McRae Industries had $19.6M in cash and cash equivalents as of April 27, 2024.

What was the sale price of the Berkeley Country Club land sold by McRae Industries?

The sale price for the Berkeley Country Club land was $2.65M.