McRae Industries, Inc. Reports Earnings For The Third Quarter And First Nine Months Of Fiscal 2017


MOUNT GILEAD, N.C., June 14, 2017 — McRae Industries, Inc. (Pink Sheets:  MCRAA and MCRAB) reported consolidated net revenues for the third quarter of fiscal 2017 of $24,092,000 as compared to $25,150,000 for the third quarter of fiscal 2016.  Net earnings for the third quarter of fiscal 2017 amounted to $1,202,000, or $0.50 per diluted Class A common share as compared to $681,000, or $0.28 per diluted Class A common share, for the third quarter of fiscal 2016.  

Consolidated net revenues for the first nine months of fiscal 2017 totaled $82,078,000 as compared to $85,681,000 for the first nine months of fiscal 2016. Net earnings for the first nine months of fiscal 2017 amounted to $4,361,000, or $1.81 per diluted Class A common share, as compared to net earnings of $4,075,000, or $1.68 per diluted Class A common share, for the first nine months of fiscal 2016.

THIRD QUARTER FISCAL 2017 COMPARED TO THIRD QUARTER FISCAL 2016

Consolidated net revenues totaled $24.1 million for the third quarter of fiscal 2017 as compared to $25.1 million for the third quarter of fiscal 2016. Sales related to our western/lifestyle boot products for the third quarter of fiscal 2017 totaled $10.1 million as compared to $12.5 million for the third quarter of fiscal 2016. This 19% decrease in net revenues is primarily a result of decreased sales in our premium western boots, children’s boots, and women’s fashion boots. Revenues from our work boot products grew approximately 9%, from $12.6 million for the third quarter of fiscal 2016 to $13.7 million for the third quarter of fiscal 2017, primarily due to an increase in production of military boots related to our multiple government contracts.   

Consolidated gross profit for the third quarter of fiscal 2017 amounted to approximately $5.8 million as compared to $5.6 million for the third quarter of fiscal 2016. Gross profit as a percentage of net revenues was up from 22.3% for the third quarter of fiscal 2016 to 24.2% for the third quarter of fiscal 2017. This is primarily a result of the increase in work boot product sales, specifically our military boots.

Consolidated selling, general and administrative (“SG&A”) expenses have decreased from $4.5 million for the third quarter of fiscal 2016 to $4.0 million for the third quarter of fiscal 2017.  This was primarily driven by decreased expenditures for commissions, salaries, and advertising.

As a result of the above, the consolidated operating profit for the third quarter of fiscal 2017 amounted to $1.8 million as compared to $1.1 million for the third quarter of fiscal 2016.

FIRST NINE MONTHS FISCAL 2017 COMPARED TO FIRST NINE MONTHS FISCAL 2016

Consolidated net revenues for the first nine months of fiscal 2017 totaled $82.1 million as compared to $85.7 million for the first nine months of fiscal 2016. Our western and lifestyle product sales totaled $38.0 million for the first nine months of fiscal 2017 as compared to $47.2 million for the first nine months of fiscal 2016, with the decrease coming from declines in our women’s, children’s, and premium western boot sales. Net revenues from our work boot business grew from $38.3 million for the first nine months of fiscal 2016 to $43.2 million for the first nine months of fiscal 2017. This increase in work boot products net revenues resulted primarily from higher military boot shipments associated with our U. S. Government contracts and commercial sales.

Consolidated gross profit totaled $20.6 million for the first nine months of fiscal 2017 as compared to $21.6 million for the first nine months of fiscal 2016. Gross profit attributable to our western and lifestyle products totaled $13.2 million for the first nine months of fiscal 2017, down from $16.8 million for the first nine months of fiscal 2016. This decrease in gross profit is directly correlated with the decrease in sales. Our work boot products gross profit grew from $4.6 million for the first nine months of fiscal 2016 to $7.1 million for the first nine months of fiscal 2017. This increase was driven by the higher military boot shipments mentioned above.

Consolidated selling, general and administrative (“SG&A”) expenses totaled approximately $13.8 million for the first nine months of fiscal 2017 as compared to $15.1 million for the first nine months of fiscal 2016. This decrease in SG&A expenses resulted primarily from decreased expenditures for commissions, salaries, and advertising.

As a result of the above, the consolidated operating profit amounted to $6.8 million for the first nine months of fiscal 2017 as compared to $6.5 million for the first nine months of fiscal 2016.

Financial Condition and Liquidity

Our financial conditions remain strong at April 29, 2017 as cash and cash equivalents totaled $28.1 million as compared to $15.7 million at July 30, 2016. Our working capital increased from $50.5 million at July 30, 2016 to $53.8 million at April 29, 2017.

We currently have two lines of credit totaling $6.75 million, all of which was fully available at April 29, 2017. 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 2018. Our $5.0 million line of credit, which also expires in January 2018, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary. 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 2017.

For the first nine months of fiscal 2017, operating activities provided approximately $14.2 million of cash. Net earnings, as adjusted for depreciation, contributed approximately $5.3 million of cash. A reduction in inventory, accounts receivables, and other assets provided approximately $9.5 million of cash. Accounts payable and other liabilities used approximately $0.6 million.

Net cash used by investing activities totaled approximately $0.3 million, primarily for manufacturing equipment.

Net cash used in financing activities totaled $1.5 million.  Dividend payments used approximately $0.9 million and common stock purchases used approximately $0.6 million.

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 29,
2017

July 30,
2016

ASSETS

Current assets: 

Cash and cash equivalents

$28,081

$15,673

Short term securities

377

501

Accounts and notes receivable, net

12,344

12,708

Inventories, net

18,949

27,944

Income tax receivable

897

Prepaid expenses and other current assets

262

433

  Total current assets

60,013

58,156

Property and equipment, net

7,597

8,147

Other assets:

Deposits

14

14

Long term securities

3,667

3,520

Real estate held for investment

3,560

3,602

Amounts due from split-dollar life insurance

2,288

2,288

Trademarks

2,824

2,824

  Total other assets

12,353

12,248

 Total assets

$79,963

$78,551

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

April 29,
2017

July 30,
2016

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities: 

Accounts payable

$3,263

$4,696

Accrued employee benefits

1,028

1,090

Accrued payroll and payroll taxes

1,006

1,207

Accrued income tax

98

Other

775

698

  Total current liabilities

6,170

7,691

Shareholders’ equity:

Common Stock:

  Class A, $1 par value; authorized 5,000,000 shares
     issued and outstanding, 2,014,842 and 2,030,658
     shares, respectively

2,015

2,031

  Class B, $1 par value; authorized 2,500,000 shares;
     issued and outstanding, 383,254 and 387,628 shares,
     respectively

383

388

Unrealized losses on investments, net of tax

(2)

(59)

Retained earnings

71,397

68,500

Total shareholders’ equity

73,793

70,860

  Total liabilities and shareholders’ equity

$79,963

$78,551

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

Three Months Ended

Nine Months Ended

April 29,

April 30,

April 29,

April 30,

2017

2016

2017

2016

Net revenues

$24,092

$25,150

$82,078

$85,681

Cost of revenues

18,266

19,552

61,497

64,079

Gross profit

5,826

5,598

20,581

21,602

Selling, general and administrative expenses

3,990

4,517

13,767

15,089

Operating profit 

1,836

1,081

6,814

6,513

Other income

123

78

277

271

Earnings before income taxes

1,959

1,159

7,091

6,784

Provision for income taxes

757

478

2,730

2,709

Net earnings 

$1,202

$681

$4,361

$4,075

Earnings per common share:

Earnings per common share: 

     Basic earnings per share:

        Class A

$0.57

$0.31

$2.08

$1.92

        Class B

0.13

0.13

0.39

0.39

     Diluted earnings per share:

        Class A

0.50

0.28

1.81

1.68

        Class B

NA

NA

NA

NA

Weighted average number of common shares outstanding:

       Class A

2,021,668

2,033,799

2,027,679

2,037,655

       Class B

384,860

388,381

386,688

389,818

        Total

2,406,528

2,422,180

2,414,367

2,427,473

McRae Industries, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

April 29,

April 30,

2017

2016

Net cash provided by operating activities

14,192

4,364

Cash Flows from Investing Activities:

Proceeds from sale of assets

87

Purchase of land for investment

(45)

(13)

Capital expenditures

(375)

(2,581)

Proceeds from securities

34

Purchase of securities

(78)

Net cash used in investing activities

(299)

(2,672)

Cash Flows from Financing Activities:

Purchase of common stock

(546)

(340)

Dividends paid

(939)

(945)

Net cash used in financing activities

(1,485)

(1,285)

Net (Decrease) Increase in Cash and Cash equivalents

12,408

407

Cash and Cash Equivalents at Beginning of Year

15,673

15,437

Cash and Cash Equivalents at End of Year 

$28,081

$15,844

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mcrae-industries-inc-reports-earnings-for-the-third-quarter-and-first-nine-months-of-fiscal-2017-300473953.html

SOURCE McRae Industries, Inc.

Related Links

http://www.mcraeindustries.com