MOUNT GILEAD, N.C. , Dec. 14, 2020 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the first quarter of fiscal 2021 of $18,939,000 as compared to $22,674,000 for the first quarter of fiscal 2020. Net earnings for the first quarter of fiscal 2021 amounted to $494,000 , or $0.21 per diluted Class A common share as compared to $992,000 , or $0.42 per diluted Class A common share, for the first quarter of fiscal 2020.
FIRST QUARTER FISCAL 2021 COMPARED TO FIRST QUARTER FISCAL 2020
Consolidated net revenues totaled $18.9 million for the first quarter of fiscal 2021 as compared to $22.7 million for the first quarter of fiscal 2020. Sales related to our western/lifestyle boot products for the first quarter of fiscal 2021 totaled $12.1 million as compared to $13.9 million for the first quarter of fiscal 2020. This 13% decrease can be attributed to the effects of the coronavirus pandemic. Revenues from our work boot products decreased approximately 22%, from $9.0 million for the first quarter of fiscal 2020 to $7.0 million for the first quarter of fiscal 2021. This is primarily a result of decreased military boot sales offset by an increase in our Dan Post work boot sales.
Consolidated gross profit for the first quarter of fiscal 2021 amounted to approximately $5.0 million as compared to $5.7 million for the first quarter of fiscal 2020. Gross profit as a percentage of net revenues was up from 25.0% for the first quarter of fiscal 2020 to 26.6% for the first quarter of fiscal 2021. 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 $4.4 million for the first quarter of fiscal 2021 as compared to $4.5 million for first quarter of fiscal 2020.
As a result of the above, the consolidated operating profit for the first quarter of fiscal 2021 amounted to $0.7 million as compared to $1.2 million for the first quarter of fiscal 2020.
Financial Condition and Liquidity
Our financial condition remained strong at October 31, 2020 as cash and cash equivalents totaled $19.1 million as compared to $21.0 million at August 1, 2020 . Our working capital increased from $57.5 million at August 1, 2020 to $57.9 million at October 31, 2020 .
We currently have two lines of credit totaling $6.75 million , all of which were fully available at October 31, 2020 . 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 2021 . Our $5.0 million line of credit, which also expires in January 2021 , 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 2021 amounted to $1.1 million . Net earnings, as adjusted for depreciation, contributed approximately $0.8 million of cash. Accounts receivable used approximately $4.8 million of cash as first quarter sales outpaced customer payments, while a decrease in inventory provided approximately $3.0 million .
Net cash provided by investing activities for the first quarter of fiscal 2021 totaled approximately $0.1 million , primarily due to the maturity of short-term investments.
Net cash used in financing activities for the first quarter of fiscal 2021 totaled $0.8 million , which was primarily used for dividend payments and the repurchase of common stock.
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 2021.
For the first quarter of fiscal 2021, Dan Post Boot Company year over year comparisons continue to improve. Sales for August were at -24.8%, September at -7.6%, and October at -1.4%. Total sales for the quarter were 10% less than the same quarter last year. Orders for August were at +10.8%, September at
-21.1%, and October at +46.1%. Total orders for the quarter increased 11.4% over the same quarter last year. This trend continues into November, as sales increased 17.7% when compared to the same month last year, while orders increased by 26.5% for the same period.
These increases continue to be driven by increased sales in e-commerce accounts (including danpostboots.com ), farm and ranch stores, and larger western lifestyle retailers. While we do not know if this trend will continue, we are encouraged by this turn of events. Because of this unexpected increase in orders in the midst of the COVID-19 pandemic, we are beginning to experience out of stock positions on some of our more popular styles. This will negatively affect shipments in the second, and possibly third, quarter. We are working with our vendors to rectify this situation as soon as possible.
Stock Repurchase Program
In December 2020 , our Board of Directors approved a repurchase program under which we may repurchase up to $1,000,000 of shares of McRae Industries common stock. We intend to purchase shares periodically through privately negotiated transactions or in the open market. The actual timing, number and value of shares repurchased under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, applicable legal requirements and other conditions.
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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October 31,
2020
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August 1,
2020
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ASSETS
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|
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Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$19,119
|
|
$20,959
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|
|
|
|
|
|
Equity investments
|
|
$4,174
|
|
$4,131
|
|
|
|
|
|
|
Debt securities
|
|
9,977
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|
9,750
|
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
12,808
|
|
8,027
|
|
|
|
|
|
|
Inventories, net
|
|
15,288
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|
18,255
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|
|
|
|
|
|
Income tax receivable
|
|
758
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|
979
|
|
|
|
|
|
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Prepaid expenses and other current assets
|
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540
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|
858
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|
|
|
|
|
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Total current assets
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62,664
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62,959
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|
|
|
|
|
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Property and equipment, net
|
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5,898
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6,060
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|
|
|
|
|
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Other assets:
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|
|
|
|
|
|
|
|
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Deposits
|
|
14
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|
14
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|
|
|
|
|
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Real estate held for investment
|
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3,242
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|
3,784
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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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|
|
|
|
|
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Trademarks
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2,824
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2,824
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|
|
|
|
|
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Total other assets
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8,368
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8,910
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|
|
|
|
|
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Total assets
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$76,930
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$77,929
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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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|
|
|
|
|
|
October 31,
2020
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August 1,
2020
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities:
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|
|
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Accounts payable
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$2,968
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$3,871
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|
|
|
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Accrued employee benefits
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500
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400
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|
|
|
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Accrued payroll and payroll taxes
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431
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457
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|
|
|
|
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Other
|
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844
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|
692
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|
|
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Total current liabilities
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4,743
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5,420
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|
|
|
|
|
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Deferred tax liabilities
|
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692
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692
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|
|
|
|
|
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Total liabilities
|
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5,435
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|
6,112
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|
|
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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, 1,938,301 and 1,957,142 shares, respectively
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1,938
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1,957
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|
|
|
|
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Class B, $1 par value; authorized 2,500,000 shares; issued and outstanding, 367,433 and 373,233 shares, respectively
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367
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|
373
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|
|
|
|
|
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Retained earnings
|
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69,190
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69,487
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|
|
|
|
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Total shareholders' equity
|
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71,495
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71,817
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|
|
|
|
|
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Total liabilities and shareholders' equity
|
|
$76,930
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$77,929
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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)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
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October 31,
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November 2,
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2020
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2019
|
|
|
|
|
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Net revenues
|
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$18,939
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$22,674
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Cost of revenues
|
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13,904
|
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17,016
|
|
|
|
|
|
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Gross profit
|
|
5,035
|
|
5,658
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|
|
|
|
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Selling, general and administrative expenses
|
|
4,357
|
|
4,469
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|
|
|
|
|
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Operating profit
|
|
678
|
|
1,189
|
|
|
|
|
|
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Other income
|
|
50
|
|
198
|
|
|
|
|
|
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Earnings before income taxes
|
|
728
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|
1,387
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|
|
|
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Provision for income taxes
|
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234
|
|
395
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|
|
|
|
|
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Net earnings
|
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$494
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$992
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Earnings per common share:
|
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|
|
|
|
|
|
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Diluted earnings per share:
|
|
|
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Class A
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0.21
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0.42
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Class B
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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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1,949,583
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1,967,559
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Class B
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368,835
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373,675
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Total
|
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2,318,418
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2,341,234
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McRae Industries, Inc. and Subsidiaries
|
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
|
|
(In thousands, except share data)
|
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(Unaudited)
|
|
|
|
|
|
|
|
Common Stock, $1 par value
|
Accumulated Other
|
|
|
|
Class A
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Class B
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Comprehensive
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Retained
|
|
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Shares
|
Amount
|
Shares
|
Amount
|
Income (Loss)
|
Earnings
|
|
Balance, August 3, 2019
|
|
1,967,559
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$1,967
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373,675
|
$374
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($12)
|
$70,994
|
|
|
|
|
|
|
|
|
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Unrealized gains on investments, net of tax
|
|
|
|
|
|
-2
|
|
|
|
|
|
|
|
|
|
|
Cash Dividend ($0.13 per Class A common stock)
|
|
|
|
|
|
|
-256
|
|
|
|
|
|
|
|
|
|
Cash Dividend ($0.13 per Class B common stock)
|
|
|
|
|
|
|
-49
|
|
|
|
|
|
|
|
|
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Net earnings
|
|
|
|
|
|
|
992
|
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Balance, November 2, 2019
|
|
1,967,559
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$1,967
|
373,675
|
$374
|
($14)
|
$71,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
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$1,957
|
373,233
|
$373
|
$0
|
$69,487
|
|
|
|
|
|
|
|
|
|
Stock Buyback
|
|
-21,141
|
-21
|
-3,500
|
-4
|
|
-490
|
|
|
|
|
|
|
|
|
|
Conversion of Class B to Class A Stock
|
|
2,300
|
2
|
-2,300
|
(2)
|
|
-
|
|
|
|
|
|
|
|
|
|
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
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$0
|
$69,190
|
|
McRae Industries, Inc. and Subsidiaries
|
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CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
October 31,
|
|
November 2,
|
|
|
2020
|
2019
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
-1,094
|
|
-1,020
|
|
|
|
|
|
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Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
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Proceeds from sale of assets
|
|
591
|
|
-
|
|
|
|
|
|
|
Purchase of land for investment
|
|
-160
|
|
-3
|
|
|
|
|
|
|
Capital expenditures
|
|
-98
|
|
-108
|
|
|
|
|
|
|
Purchase of securities
|
|
-5,118
|
|
-33
|
|
|
|
|
|
|
Proceeds from sale of securities
|
|
4,855
|
|
2,265
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
70
|
|
2,121
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
Repurchase company stock
|
|
(515)
|
|
-
|
|
|
|
|
|
|
Dividends paid
|
|
-301
|
|
-304
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
-816
|
|
-304
|
|
|
|
|
|
|
Net (Decrease) Increase in Cash and Cash equivalents
|
|
-1,840
|
|
797
|
|
|
|
|
|
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Cash and Cash Equivalents at Beginning of Year
|
|
20,959
|
|
12,799
|
|
|
|
|
|
|
Cash and Cash Equivalents at End of Year
|
|
$19,119
|
|
$13,596
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View original content: http://www.prnewswire.com/news-releases/mcrae-industries-inc-reports-earnings-for-the-first-quarter-of-fiscal-2021-301192319.html
SOURCE McRae Industries, Inc.