MOUNT GILEAD, N.C., March 15, 2017 /PRNewswire/ -- McRae
Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the second quarter of fiscal
2017 of $28,113,000 as compared to $28,801,000 for the second quarter
of fiscal 2016. Net earnings for the second quarter of fiscal 2017 amounted to $1,633,000, or
$0.68 per diluted Class A common share as compared to $1,399,000, or
$0.58 per diluted Class A common share, for the second quarter of fiscal 2016.
Consolidated net revenues for the first six months of fiscal 2017 totaled $57,986,000 as
compared to $60,531,000 for the first six months of fiscal 2016. Net earnings for the first six
months of fiscal 2017 amounted to $3,160,000, or $1.31 per diluted
Class A common share, as compared to net earnings of $3,394,000, or $1.40 per diluted Class A common share, for the first six months of fiscal 2016.
SECOND QUARTER FISCAL 2017 COMPARED TO SECOND QUARTER FISCAL 2016
Consolidated net revenues totaled $28.1 million for the second quarter of fiscal 2017 as
compared to $28.8 million for the second quarter of fiscal 2016. Sales related to our
western/lifestyle boot products for the second quarter of fiscal 2017 totaled $13.5 million as
compared to $16.3 million for the second quarter of fiscal 2016. This 17% decrease in net revenues
is primarily a result of decreased sales in our ladies fashion boots. As expected, the ladies western boots are declining to more
historical levels and we continue to see softness in most sectors of our western/lifestyle boot products. Revenues from our work
boot products grew approximately 13%, from $12.4 million for the second quarter of fiscal 2016 to
$14.1 million for the second quarter of fiscal 2017 as the production of military boots related to
our multiple government contracts continues to increase.
Consolidated gross profit for the second quarter of fiscal 2017 amounted to approximately $7.4
million as compared to $7.3 million for the second quarter of fiscal 2016. Gross profit as a
percentage of net revenues was up from 25.5% for the second quarter of fiscal 2016 to 26.3% for the second quarter of fiscal
2017. This is primarily due to labor efficiencies gained and decreased overhead in the manufacturing of our military boots.
Consolidated selling, general and administrative ("SG&A") expenses totaled approximately $4.8
million for the second quarter of fiscal 2017 as compared to $5.1 million for the second
quarter of fiscal 2016. This decrease in SG&A expenses resulted primarily from decreased expenditures for professional
services, sales commissions, and heath insurance costs.
As a result of the above, the consolidated operating profit for the second quarter of fiscal 2017 amounted to $2.6 million as compared to $2.2 million for the second quarter of fiscal
2016.
FIRST SIX MONTHS FISCAL 2017 COMPARED TO FIRST SIX MONTHS FISCAL 2016
Consolidated net revenues for the first six months of fiscal 2017 totaled $58.0 million as
compared to $60.5 million for the first six months of fiscal 2016. Our western and lifestyle
product sales totaled $27.9 million for the first six months of fiscal 2017 as compared to
$34.7 million for the first six months of fiscal 2016, with the decrease resulting from a softening
in higher priced ladies fashion boots and most sectors of our western/lifestyle products. Net revenues from our work boot
business grew from $25.7 million for the first six months of fiscal 2016 to $29.5 million for the first six 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.
Consolidated gross profit totaled $14.8 million for the first six months of fiscal 2017 as
compared to $16.0 million for the first six months of fiscal 2016. Gross profit attributable to our
western and lifestyle products totaled $9.9 million for the first six months of fiscal 2017, down
from $12.5 million for the first six 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 $3.4
million for the first six months of fiscal 2016 to $4.8 million for the first six 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 $9.8
million for the first six months of fiscal 2017 as compared to $10.6 million for the first
six months of fiscal 2016. This decrease in SG&A expenses resulted primarily from decreased expenditures for professional
services and sales commissions.
As a result of the above, the consolidated operating profit amounted to $5.0 million for the
first six months of fiscal 2017 as compared to $5.4 million for the first six months of fiscal
2016.
Financial Condition and Liquidity
Our financial condition remained strong at January 28, 2017 as cash and cash equivalents totaled
$23.4 million as compared to $15.7 million at July 30, 2016. Our working capital increased from $50.5 million at July 30, 2016 to $53.2 million at January 28,
2017.
We currently have two lines of credit totaling $6.75 million, all of which was fully available
at January 28, 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 six months of fiscal 2017, operating activities provided approximately $8.6
million of cash. Net earnings, as adjusted for depreciation, contributed approximately $3.8
million of cash. Accounts and notes receivable, as adjusted for valuation allowances, used approximately $1.8 million of cash as a result of timing of payments related to the western and work boot business. Decreased
inventory levels in both of our boot businesses provided approximately $8.4 million of cash.
Accounts payable, employee benefit distributions, accrued payroll and payroll taxes, and income tax payments used approximately
$1.8 million of cash.
Net cash used by investing activities totaled approximately $0.3 million, primarily for a
building improvements and manufacturing equipment.
Net cash used in financing activities totaled $0.6 million, which was used for dividend
payments.
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.
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McRae Industries, Inc. and Subsidiaries
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CONSOLIDATED BALANCE SHEETS
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(In thousands, except share data)
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(Unaudited)
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January 28,
2017
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July 30,
2016
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ASSETS
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Current assets:
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Cash and cash equivalents
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$23,406
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$15,673
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Short term securities
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377
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501
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Accounts and notes receivable, net
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14,496
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12,708
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Inventories, net
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19,596
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27,944
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Income tax receivable
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22
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897
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Prepaid expenses and other current assets
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365
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433
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Total current assets
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58,262
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58,156
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Property and equipment, net
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7,804
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8,147
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Other assets:
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Deposits
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14
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14
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Long term securities
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3,612
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3,520
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Real estate held for investment
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3,627
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3,602
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Amounts due from split-dollar life insurance
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2,288
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2,288
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Trademarks
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2,824
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2,824
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Total other assets
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12,365
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12,248
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Total assets
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$78,431
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$78,551
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McRae Industries, Inc. and Subsidiaries
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CONSOLIDATED BALANCE SHEETS
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(In thousands, except share data)
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(Unaudited)
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January 28,
2017
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July 30,
2016
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$2,621
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$4,696
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Accrued employee benefits
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777
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1,090
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Accrued payroll and payroll taxes
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891
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1,207
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Other
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739
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698
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Total current liabilities
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5,028
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7,691
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Shareholders' equity:
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Common Stock:
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Class A, $1 par value; authorized 5,000,000 shares
issued and outstanding, 2,031,188 and 2,030,658
shares, respectively
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2,031
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2,031
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Class B, $1 par value; authorized 2,500,000 shares;
issued and outstanding, 387,099 and 387,628 shares,
respectively
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387
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388
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Unrealized losses on investments, net of tax
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(47)
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(59)
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Retained earnings
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71,032
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68,500
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Total shareholders' equity
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73,403
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70,860
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Total liabilities and shareholders' equity
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$78,431
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$78,551
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McRae Industries, Inc. and Subsidiaries
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except share data)
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(Unaudited)
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Three Months Ended
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Six Months Ended
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January 28,
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January 30,
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January 28,
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January 30,
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2017
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2016
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2017
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2016
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Net revenues
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$28,113
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$28,801
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$57,986
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$60,531
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Cost of revenues
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20,727
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21,456
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43,231
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44,528
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Gross profit
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7,386
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7,345
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14,755
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16,003
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Selling, general and administrative expenses
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4,813
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5,115
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9,777
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10,571
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Operating profit
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2,573
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2,230
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4,978
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5,432
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Other income
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61
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104
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155
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193
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Earnings before income taxes
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2,634
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2,334
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5,133
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5,625
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Provision for income taxes
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1,001
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935
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1,973
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2,231
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Net earnings
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$1,633
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$1,399
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$3,160
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$3,394
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Earnings per common share:
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Diluted earnings per share1:
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Class A
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0.68
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0.58
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1.31
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1.40
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Class B
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NA
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NA
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NA
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NA
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Weighted average number of common shares outstanding:
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Class A
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2,030,710
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2,039,822
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2,030,684
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2,039,584
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Class B
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387,577
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390,003
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387,603
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390,537
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Total
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2,418,287
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2,429,825
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2,418,287
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2,430,121
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1Diluted earnings per share is calculated using the if-converted
method, which assumes that all Class B common shares are converted into Class A common shares. Therefore, for Class
A shares, distributed earnings with respect to Class A and all undistributed earnings are used to calculate diluted
earnings per share. For Class B shares, distributed earnings with respect to Class B and no undistributed earnings
are used to calculate diluted earnings per share. The current period calculation has been computed in accordance
with the foregoing and the prior year calculation has been adjusted to correctly reflect this method.
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McRae Industries, Inc. and Subsidiaries
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(In thousands)
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(Unaudited)
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Six Months Ended
|
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January 28,
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January 30,
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2017
|
2016
|
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Net cash provided by operating activities
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8,617
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(652)
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Cash Flows from Investing Activities:
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Purchase of land for investment
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(25)
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(11)
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Capital expenditures
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(274)
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(1,611)
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Purchase of securities
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43
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(67)
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Net cash used in investing activities
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(256)
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(1,689)
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Cash Flows from Financing Activities:
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Purchase of common stock
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-
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(29)
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Dividends paid
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(628)
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(631)
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Net cash used in financing activities
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(628)
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(660)
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Net (Decrease) Increase in Cash and Cash equivalents
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7,733
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(3,001)
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Cash and Cash Equivalents at Beginning of Year
|
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15,673
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15,437
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Cash and Cash Equivalents at End of Year
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$23,406
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$12,436
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mcrae-industries-inc-reports-earnings-for-the-second-quarter-and-first-six-months-of-fiscal-2017-300424197.html
SOURCE McRae Industries, Inc.