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McRae Industries, Inc. Reports Earnings For The First Quarter Of Fiscal 2013
Submitted by admin on 1/8/2013 @ 1:30 PM
Companies mentioned in this article:
McRae Industries, Inc.
MOUNT GILEAD, N.C., Jan. 8, 2013 /PRNewswire/ -- McRae Industries, Inc. (Pink Sheets: MRINA and MRINB) reported consolidated net revenues for the first quarter of fiscal 2013 of $24,864,000 as compared to $20,195,000 for the first quarter of fiscal 2012. Net earnings for the first quarter of fiscal 2013 amounted to $1,943,000, or $0.87 per diluted Class A common share as compared to net earnings of $1,379,000, or $0.63 per diluted Class A common share, for the first quarter of fiscal 2012.
FIRST QUARTER FISCAL 2013 COMPARED TO FIRST QUARTER FISCAL 2012
Consolidated net revenues totaled $24.9 million for the first quarter of fiscal 2013 as compared to $20.2 million for the first quarter of fiscal 2012. Sales related to our western/lifestyle boot products for the first quarter of fiscal 2013 totaled $18.5 million as compared to $14.1 million for the first quarter of fiscal 2012 as demand for these products remained strong. Revenues from our work boot products grew approximately 3%, from $6.1 million for the first quarter of fiscal 2012 to $6.3 million for the first quarter of fiscal 2013. The increased demand for these footwear products resulted primarily from an improved economy and the commencement of two military boot contracts with the U. S. Government.
Consolidated gross profit for the first quarter of fiscal 2013 amounted to approximately $7.9 million as compared to $6.4 million for the first quarter of fiscal 2012. The growth in gross profit was primarily attributable to the increase in net revenues. Gross profit as a percentage of net revenues inched up from 31.5% for the first quarter of fiscal 2012 to 31.7% for the first quarter of fiscal 2013 as product pricing continued to stay ahead of rising product costs.
Consolidated selling, general and administrative ("SG&A") expenses totaled approximately $4.8 million for the first quarter of fiscal 2013 as compared to $4.2 million for the first quarter of fiscal 2012. This increase in SG&A expenses resulted primarily from increased expenditures for sales related compensation, travel expenses, administrative salaries, health insurance costs and employee benefit costs, which were partially offset by reduced expenditures for office rentals, sales promotional costs, and professional fees.
As a result of the above, the consolidated operating profit for the first quarter of fiscal 2013 amounted to $3.1 million as compared to $2.2 million for the first quarter of fiscal 2012.
Financial Condition and Liquidity
Our financial condition remained strong at October 27, 2012. Cash and cash equivalents totaled $9.1 million as compared to $12.9 million at July 28, 2012. Our working capital amounted to $39.7 million at October 27, 2012 as compared to $38.9 million at July 28, 2012.
We currently have two lines of credit with a bank totaling $6.75 million, all of which was fully available at October 27, 2012. 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 2014. The $5.0 million line of credit, which also expires in January 2014, 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 2013.
Net cash used by operating activities for the first quarter of fiscal 2013 amounted to $2.4 million. Net earnings, as adjusted for depreciation, contributed approximately $2.1 million of cash. Accounts and notes receivable used approximately $5.5 million of cash as strong first quarter sales, primarily attributable to the western and work boot business, outpaced customer payments. Increased inventory levels primarily associated with material purchases to support our two new Government contracts used approximately $1.2 million of cash. The timing of payments for inventory purchases and employee benefits provided approximately $1.3 million of cash. The payment of accrued sales commissions used approximately $280,000 of cash. The timing of income tax payments provided approximately $1.1 million of cash.
Net cash used by investing activities totaled approximately $1.2 million. Investment in "held to maturity securities" used approximately $1.05 million while capital expenditures, primarily for manufacturing, office, phone and computer equipment, used approximately $142,000.
Net cash used in financing activities totaled $197,000, which was used for dividend payments and to repurchase Company stock.
RECLASSIFICATION
Certain amounts in the 2012 financial statements have been reclassified to the 2013 presentation.
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
October 27, July 28,
2012 2012
---- ----
Assets
Current assets:
Cash and cash
equivalents $9,082 $12,874
Marketable securities 78 0
Accounts and notes
receivable, net 17,276 11,782
Inventories, net 20,753 19,572
Income tax receivable 0 537
Prepaid expenses and
other current assets 343 395
--- ---
Total current assets 47,532 45,160
------ ------
Property and equipment,
net 3,102 3,116
----- -----
Other assets:
Marketable securities-
long term 967 0
Real estate held for
investment 3,673 3,673
Amount due from split-
dollar life insurance 2,288 2,288
Trademarks 2,824 2,824
Total other assets 9,752 8,785
----- -----
Total assets $60,386 $57,061
======= =======
McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
October 27, July 28,
2012 2012
---- ----
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $4,165 $3,373
Accrued employee
benefits 1,649 1,158
Accrued payroll and
payroll taxes 723 1,003
Accrued income tax 496 0
Other accrued
liabilities 826 746
--- ---
Total current
liabilities 7,859 6,280
----- -----
Shareholders' equity:
Common Stock:
Class A, $1 par;
Authorized 5,000,000
shares; Issued 2,033 2,031
and outstanding, 2,033,144
shares and 2,030,880 shares,
respectively
Class B, $1 par;
Authorized 2,500,000
shares; Issued 405 408
and outstanding, 405,112 shares
and 408,376 shares,
respectively
Retained earnings 50,089 48,342
------ ------
Total shareholders'
equity 52,527 50,781
------ ------
Total liabilities and
shareholders' equity $60,386 $57,061
======= =======
McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months
Ended
October 27, October 29,
2012 2011
---- ----
Net revenues $24,864 $20,195
Cost of revenues 16,954 13,799
------ ------
Gross profit 7,910 6,396
----- -----
Costs and expenses:
Selling, general
and
administrative
expenses 4,790 4,178
Other expense
(income), net (38) (43)
Interest expense 0 0
--- ---
Total costs and
expenses 4,752 4,135
Earnings before
income taxes 3,158 2,261
Provision for
income taxes 1,215 882
----- ---
Net earnings $1,943 $1,379
====== ======
Earnings per common share:
Basic earnings per share:
Class A $1.05 $.76
Class B 0 0
Diluted earnings per share:
Class A .87 .63
Class B NA NA
Weighted average number of common
shares outstanding:
Class A 2,030,961 2,047,460
Class B 407,460 419,470
------- -------
Total 2,438,421 2,466,930
--------- ---------
McRae Industries, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended
October 27, October 29,
2012 2011
---- ----
Net cash used in by
operating activities $(2,412) $(1,324)
------- -------
Cash flows from investing activities:
Proceeds from sales of
assets 4 1
Purchase of securities (1,045) 0
Capital expenditures (142) (61)
---- ---
Net cash used in by
investing activities (1,183) (60)
------ ---
Cash flows from financing activities:
Purchase of company stock (14) 0
Dividends paid (183) (184)
---- ----
Net cash used in financing
activities (197) (184)
---- ----
Net decrease in cash and
cash equivalents (3,792) (1,568)
Cash and cash equivalents
at beginning of period 12,874 10,274
------ ------
Cash and cash equivalents
at end of period $9,082 $8,706
====== ======
SOURCE McRae Industries, Inc.