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

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McRae Industries (MCRAA) reported Q2 fiscal 2025 financial results with consolidated net revenues of $27.5 million, up from $25.8 million in Q2 2024. However, net earnings decreased to $1.05 million ($0.47 per diluted Class A share) from $1.64 million ($0.72 per share) year-over-year.

Western/lifestyle boot sales increased to $20.4 million from $18.2 million, driven by Dan Post and Laredo brands. Work boot revenues declined to $7.5 million from $7.8 million. Gross profit margin decreased to 25.9% from 27.1%, affected by military boot manufacturing inefficiencies.

For the first six months of fiscal 2025, total revenues were $56.3 million, down from $58.6 million, with net earnings of $2.9 million ($1.28 per share) compared to $4.86 million ($2.15 per share) in 2024. The company maintains a strong financial position with $22.8 million in cash and cash equivalents and $6.75 million in available credit lines.

Positive

• Western/lifestyle boot sales increased 12% to $20.4M in Q2 2025
• Cash and equivalents grew to $22.8M from $20.7M
• Working capital improved to $79.6M from $75.0M
• Total Q2 revenues increased 6.7% to $27.5M

Negative

• Q2 net earnings declined 35.6% to $1.05M from $1.64M
• Work boot sales decreased to $7.5M from $7.8M
• Gross profit margin dropped to 25.9% from 27.1%
• Operating profit fell 50% to $0.7M from $1.4M
• SG&A expenses increased 14.3% to $6.4M

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
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
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

 

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SOURCE McRae Industries, Inc.

FAQ

What were McRae Industries (MCRAA) Q2 2025 earnings per share?

McRae Industries reported earnings of $0.47 per diluted Class A share in Q2 2025, down from $0.72 in Q2 2024.

How did McRae's western boot sales perform in Q2 2025?

Western/lifestyle boot sales increased to $20.4 million from $18.2 million, driven by growth in Dan Post and Laredo brands.

What caused the decline in McRae's (MCRAA) gross profit margin for Q2 2025?

Gross profit margin fell to 25.9% from 27.1% due to decreased margins on military boot sales from manufacturing inefficiencies.

What is McRae Industries' (MCRAA) current cash position in 2025?

As of February 1, 2025, McRae had $22.8 million in cash and cash equivalents, up from $20.7 million in August 2024.

How much credit availability does McRae (MCRAA) have as of Q2 2025?

McRae has two credit lines totaling $6.75 million, fully available, expiring in January 2026.