MOUNT GILEAD, N.C., Dec. 14, 2022 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported consolidated net revenues for the first quarter of fiscal 2023 of $33,783,000 as compared to $27,588,000 for the first quarter of fiscal 2022. Net earnings for the first quarter of fiscal 2023 amounted to $2,857,000, or $1.26 per diluted Class A common share as compared to $2,222,000, or $0.98 per diluted Class A common share, for the first quarter of fiscal 2022.
FIRST QUARTER FISCAL 2023 COMPARED TO FIRST QUARTER FISCAL 2022
Consolidated net revenues totaled $33.8 million for the first quarter of fiscal 2023 as compared to $27.6 million for the first quarter of fiscal 2022. Sales related to our western/lifestyle boot products for the first quarter of fiscal 2023 totaled $26.8 million as compared to $19.9 million for the first quarter of fiscal 2022. This 35% increase can be attributed to increases across all brands. However, we do expect sales for these products to decrease during the remainder of Fiscal 2023 as compared to the prior year. Revenues from our work boot products decreased approximately 3%, from $7.2 million for the first quarter of fiscal 2022 to $7.0 million for the first quarter of fiscal 2023. This is primarily a result of decreased Dan Post and Laredo work boot sales offset by an increase in military boot sales. During the first quarter, we continued to have difficulty hiring and training qualified employees in our military boot manufacturing facility. This, along with machinery delivery issues, resulted in a decrease in scheduled production for the U.S. Government military boot orders. The company is working diligently to solve these production issues.
Consolidated gross profit for the first quarter of fiscal 2023 amounted to approximately $10.3 million as compared to $8.0 million for the first quarter of fiscal 2022. Gross profit as a percentage of net revenues was up from 28.9% for the first quarter of fiscal 2022 to 30.5% for the first quarter of fiscal 2023. This is primarily attributable to our sales mix being more heavily weighted in our higher margin western/lifestyle boot products.
Consolidated selling, general and administrative ("SG&A") expenses totaled approximately $6.0 million for the first quarter of fiscal 2023 as compared to $5.1 million for first quarter of fiscal 2022. This is primarily due to increased commissions and employee related expenses.
As a result of the above, the consolidated operating profit for the first quarter of fiscal 2023 amounted to $4.2 million as compared to $2.8 million for the first quarter of fiscal 2022.
Financial Condition and Liquidity
Our financial condition remained strong at October 29, 2022 as cash and cash equivalents totaled $13.3 million as compared to $15.3 million at July 30, 2022. Our working capital increased from $67.0 million at July 30, 2022 to $69.4 million at October 29, 2022.
We currently have two lines of credit totaling $6.75 million, all of which were fully available at October 29, 2022. 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 2023. Our $5.0 million line of credit, which also expires in January 2023, 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 2022 amounted to $1.2 million. Net earnings, as adjusted for depreciation, contributed approximately $3.1 million of cash. Inventory used approximately $7.1 million of cash and accounts payable used approximately $1.1 million of cash. Accounts receivable and accrued income taxes provided approximately $3.7 million of cash.
Net cash used in investing activities for the first quarter of fiscal 2023 totaled approximately $0.5 million, primarily due to the purchase of fixed assets.
Net cash used in financing activities for the first quarter of fiscal 2023 totaled $0.3 million, which was primarily used 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 2023.
Furthermore, the two properties in Berkeley County, South Carolina for which we have entered into agreements to sell for $3,250,000 remain in the due diligence period at this time.
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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SOURCE McRae Industries, Inc.
