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McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 2025

News Provided by PR Newswire2025-03-17

McRAE INDUSTRIES, INC. REPORTS EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 2025

[17-March-2025]

MOUNT GILEAD, N.C., March 17, 2025 /PRNewswire/ -- McRae Industries, Inc. (Pink: MCRAA and MCRAB) reported consolidated net revenues for the second quarter of fiscal 2025 of $27,548,000 as compared to $25,815,000 for the second quarter of fiscal 2024. Net earnings for the second quarter of fiscal 2025 amounted to $1,053,000, or $0.47 per diluted Class A common share as compared to $1,636,000, or $0.72 per diluted Class A common share, for the second quarter of fiscal 2024.

Consolidated net revenues for the first six months of fiscal 2025 totaled $56,250,000 as compared to $58,641,000 for the first six months of fiscal 2024. Net earnings for the first six months of fiscal 2025 amounted to $2,899,000, or $1.28 per diluted Class A common share, as compared to net earnings of $4,858,000, or $2.15 per diluted Class A common share, for the first six months of fiscal 2024.

SECOND QUARTER FISCAL 2025 COMPARED TO SECOND QUARTER FISCAL 2024

Consolidated net revenues totaled $27.5 million for the second quarter of fiscal 2025 as compared to $25.8 million for the second quarter of fiscal 2024. Sales related to our western/lifestyle boot products for the second quarter of fiscal 2025 totaled $20.4 million as compared to $18.2 million for the second quarter of fiscal 2024. This increase in net revenues was spread across several western product lines, namely the Dan Post and Laredo brands. Revenues from our work boot products decreased from $7.8 million for the second quarter of fiscal 2024 to $7.5 million for the second quarter of fiscal 2025. This was primarily a result of decreased sales for our Dan Post work boots.

Consolidated gross profit for the second quarter of fiscal 2025 amounted to approximately $7.1 million as compared to $7.0 million for the second quarter of fiscal 2024. However, gross profit as a percentage of net revenues was down from 27.1% for the second quarter of fiscal 2024 to 25.9% for the second quarter of fiscal 2025. This is primarily because of decreased margins on military boot sales due to inefficiencies in the manufacturing facility in the second quarter.

Consolidated selling, general and administrative expenses totaled approximately $6.4 million for the second quarter of fiscal 2025 as compared to $5.6 million for the second quarter of fiscal 2024. This increase resulted primarily from increased sales commissions and marketing expenses.

As a result of the above, the consolidated operating profit for the second quarter of fiscal 2025 amounted to $0.7 million as compared to $1.4 million for the second quarter of fiscal 2024.

FIRST SIX MONTHS FISCAL 2025 COMPARED TO FIRST SIX MONTHS FISCAL 2024

Consolidated net revenues for the first six months of fiscal 2025 totaled $56.3 million as compared to $58.6 million for the first six months of fiscal 2024. Our western and lifestyle product sales totaled $41.4 million for the first six months of fiscal 2025 as compared to $40.2 million for the first six months of fiscal 2024. This increase was a result of increased sales in the Dan Post and Dingo brands, offset by decreased sales in the Laredo and El Dorado brands. Net revenues from our work boot business decreased from $17.2 million for the first six months of fiscal 2024 to $15.5 million for the first six months of fiscal 2025. This decrease was spread across all work boot product lines.

Consolidated gross profit totaled $15.5 million, or 27.5%, for the first six months of fiscal 2025 as compared to $16.9 million, or 28.8%, for the first six months of fiscal 2024. This is primarily due to the fact that the 2024 gross profit was positively affected by the sale of real estate held for investment.

Consolidated selling, general and administrative expenses totaled approximately $12.9 million for the first six months of fiscal 2025 as compared to $11.6 million for the first six months of fiscal 2024. This increase resulted primarily from increased sales commissions and marketing expenses.

As a result of the above, the consolidated operating profit amounted to $2.6 million for the first six months of fiscal 2025 as compared to $5.3 million for the first six months of fiscal 2024.

Financial Condition and Liquidity

Our financial condition remained strong at February 1, 2025 as cash and cash equivalents totaled $22.8 million as compared to $20.7 million at August 3, 2024. Our working capital increased from $75.0 million at August 3, 2024 to $79.6 million at February 1, 2025.

We currently have two lines of credit totaling $6.75 million, all of which was fully available at February 1, 2025. 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 2026. Our $5.0 million line of credit, which also expires in January 2026, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.

For the first six months of fiscal 2025, operating activities used approximately $0.6 million of cash. Net earnings contributed approximately $2.9 million of cash. Adjustments to reconcile net earnings to net cash used in operating activities totaled approximately $3.5 million. These adjustments were driven significantly by increased inventory and offset by decreased accounts receivable.

Net cash provided by investing activities totaled approximately $4.9 million, primarily due to the purchase and sale of securities.

Net cash used in financing activities totaled $2.2 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 2025.

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: uncertainties associated with COVID-19 or coronavirus, including its possible effects on our operations, supply chain, and the demand for our products and services, our ability to complete the sale of our properties under contract for sale, 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)

	February 1, 2025	August 3, 2024
	February 1, 2025	August 3, 2024
ASSETS
Current assets:

Cash and cash equivalents	$22,836	$20,723

Equity investments	8,446	8,112

Debt securities	8,174	9,232

Accounts receivable, net	16,546	20,179

Inventories, net	28,355	23,788

Income tax receivable	427	268

Prepaid expenses and other current assets	1,378	226

Total current assets	86,162	82,528

Property and equipment, net	5,054	5,171

Other assets:

Deposits	14	14

Right to Use Asset	1,865	2,137

Real estate held for investment	2,793	2,793

Debt securities	7,293	11,075

Trademarks	2,824	2,824

Total other assets	14,789	18,843

Total assets	$106,005	$106,542

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

	February 1, 2025	August 3, 2024
	February 1, 2025	August 3, 2024
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

Accounts payable	$3,717	$3,692

Accrued employee benefits	527	1,399

Accrued payroll and payroll taxes	694	866

Lease liability	548	548

Income tax payable	-	-

Other	1,043	976

Total current liabilities	6,529	7,481

Lease liability	1,317	1,589

Deferred tax liabilities	407	407

Total liabilities	8,253	9,477

Shareholders' equity:
Common Stock:
Class A, $1 par value; authorized 5,000,000 shares issued and outstanding, 1,896,334 and 1,896,334 shares, respectively	1,896	1,896

Class B, $1 par value; authorized 2,500,000 shares; issued and outstanding, 363,826 and 363,826 shares, respectively	364	364

Retained earnings	95,492	94,805

Total shareholders' equity	97,752	97,065

Total liabilities and shareholders' equity	$106,005	$106,542

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)

	Three Months Ended		Six Months Ended
	February 1,	January 27,	February 1,	January 27,
	2025	2024	2025	2024

Net revenues	$27,548	$25,815	$56,250	$58,641

Cost of revenues	20,417	18,816	40,782	41,733

Gross profit	7,131	6,999	15,468	16,908

Selling, general and administrative expenses	6,382	5,580	12,911	11,583

Operating profit	749	1,419	2,557	5,325

Other income	734	852	1,462	916

Earnings before income taxes	1,483	2,271	4,019	6,241

Provision for income taxes	430	635	1,120	1,383

Net earnings	$1,053	$1,636	$2,899	$4,858



Earnings per common share:

Diluted earnings per share:
Class A	0.47	0.72	1.28	2.15
Class B	NA	NA	NA	NA

Weighted average number of common shares outstanding:
Class A	1,896,334	1,896,334	1,896,334	1,896,277
Class B	363,826	363,826	363,826	363,883
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 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

	Common Stock, $1 par value				Accumulated Other
	Class A		Class B		Comprehensive	Retained
	Shares	Amount	Shares	Amount	Income (Loss)	Earnings
Balance, August 3, 2024	1,896,334	$1,897	363,826	$363	$0	$94,805

Cash Dividend ($0.14 per Class A common stock)						(265)

Cash Dividend ($0.14 per Class B common stock)						(51)

Net earnings						1,846
Balance, November 2, 2024	1,896,334	$1,897	363,826	$363	$0	$96,335

Cash Dividend ($0.84 per Class A common stock)						(1,592)

Cash Dividend ($0.84 per Class B common stock)						(304)

Net earnings						1,053
Balance, February 1, 2025	1,896,334	$1,897	363,826	$363	$0	$95,492

McRae Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended
	February 1,	January 27,
	2025	2024

Cash Flows from Operating Activities:

Net earnings	$2,899	$4,858

Adjustments to reconcile net earnings to net cash used in operating activities	(3,472)	3,584

Net cash used in operating activities	(573)	8,442

Cash Flows from Investing Activities:

Proceeds from sale of land	50	1,985

Proceeds from sale of fixed assets	263	-

Capital expenditures	(275)	(143)

Purchase of securities	(1,112)	(19,011)

Proceeds from sale of securities	5,973	10,681

Net cash provided by investing activities	4,899	(6,488)

Cash Flows from Financing Activities:

Dividends paid	(2,213)	(2,009)

Net cash used in financing activities	(2,213)	(2,009)

Net (Decrease) Increase in Cash and Cash equivalents	2,113	(55)

Cash and Cash Equivalents at Beginning of Year	20,723	18,329

Cash and Cash Equivalents at End of Period	$22,836	$18,274