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

MOUNT GILEAD, N.C., March 17, 2025 /PRNewswire/ —  McRae Industries, Inc. MCRAA 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.

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SOURCE McRae Industries, Inc.