McRae Industries was founded in 1959 by Branson J. McRae
with the primary focus of manufacturing high quality children’s shoes.
In 1966, during the height of the Vietnam War, McRae received a
contract award from the U. S. Government to manufacture military combat
boots for the United States Army using the “direct molded sole” design.
As a result, McRae Industries’ Footwear division has provided quality
combat boots to the men and women serving in the U. S. Army for more
than 40 years.
In a strategic move in 1996, McRae Industries purchased American West
Trading Company, a manufacturer and seller of a variety of western boot
products. During the 2002 to 2006 time period, the array of western
boot products was significantly enhanced by the acquisition of several
popular brand names – Dingo, Dan Post and Laredo. Also, during this
same period of time, the company’s name was changed to the Dan Post
Boot Company to more closely identify our products in the western boot
market. In 2005, Dan Post Boot Company became a licensee of John Deere
and began to design and market men’s and women’s work boots along with
a line of children’s shoes and boots. Dan Post continued to expand its
product mix in 2008 with the addition of the durable, price effective
McRae Industrial line of work boots.
McRae Industries, Inc. Reports Earnings For Fiscal 2017
MOUNT GILEAD, N.C., Nov. 15, 2017 /PRNewswire/ -- McRae
Industries, Inc. (Pink Sheets: MCRAA and MCRAB) reported
consolidated net revenues for fiscal 2017 of $104,316,000 as compared
to $108,758,000 for fiscal 2016. Net earnings for fiscal 2017
totaled $5,083,000 as compared to $4,692,000 for fiscal 2016. Net
earnings per diluted Class A common share were $2.11 for fiscal 2017 as
compared to $1.93 for fiscal 2016.
CONSOLIDATED RESULTS OF OPERATIONS, FISCAL 2017 COMPARED TO FISCAL 2016
Consolidated net revenues for fiscal 2017 amounted to approximately
$104.3 million as compared to $108.8 million for fiscal 2016. Our
western/lifestyle boot segment, which includes western wear, ladies
fashion, and children footwear products under the Dan Post, Laredo,
Dingo, El Dorado, and John Deere brand names, experienced a decrease in
revenue of 17% from $58.8 million in 2016 to $48.8 million in
2017. Women's fashion and premium children's boots had the
largest sales decrease. Net revenues for our work boot segment,
which includes Dan Post, Laredo, John Deere, and McRae Industrial work
boot products along with our military boots, increased by 9.5% with
sales increasing from $49.7 million in fiscal 2016 to $54.2 million in
2017. The military boot sales increased by 15.2% from $39.6
million in 2016 to $45.6 million in 2017, while all other work boot
brands decreased 12.8% from $10.1 million in fiscal 2016 to $8.6
million in fiscal 2017.
Consolidated gross profit for fiscal 2017 totaled $25.6 million as
compared to $26.9 million for fiscal 2016. Gross margin for the
western/lifestyle segment decreased from 35% in fiscal 2016 to 34.2% in
fiscal 2017. Gross margins on our work boot segment increased
slightly from 12.3% in fiscal 2016 to 15.8% in fiscal 2017 because of
manufacturing efficiencies, a higher volume of production, and better
product mix in our military boots.
Consolidated selling, general and administrative ("SG&A") expenses
amounted to $17.8 million as compared to $19.8 million for fiscal
2016. This was primarily driven by decreased commissions,
salaries, advertising, and a company-wide effort to minimize
As a result of the above, consolidated operating profit totaled
approximately $7.8 million for fiscal 2017 as compared to $7.1 million
for fiscal 2016.
FINANCIAL CONDITION AND LIQUIDITY
At July 29, 2017, our financial condition and liquidity remained strong
as cash and cash equivalents totaled $28.1 million as compared to $15.7
million at July 30, 2016. Our working capital totaled $56.5
million at July 29, 2017 as compared to $52.8 million at July 30, 2016.
We currently have two lines of credit totaling $6.75 million, both of
which were fully available at July 29, 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. The $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.
Net cash provided by operating activities for fiscal 2017 amounted to
approximately $14.8 million. Net earnings, as adjusted for
depreciation, contributed approximately $6.3 million of cash, and a
reduction in income tax receivable contributed approximately $0.7
million. Lower inventory levels throughout the business provided
approximately $9.7 million of cash. The timing of payments for
accounts payable and lower accrued payroll used approximately $2.6
million of cash.
Net cash used in investing activities totaled approximately $0.7
million. The majority was used for capital expenditures and the
purchase of securities. This was partially offset by proceeds
from the sale of securities.
Net cash used to finance our dividend payments and the purchase of common stock totaled approximately $1.8 million.
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 fiscal 2018.
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.