Consolidated net revenues for the first nine months of fiscal 2026 totaled $86,569,000 as compared to $87,120,000 for the first nine months of fiscal 2025. Net earnings for the first nine months of fiscal 2026 amounted to $3,262,000, or $1.45 per diluted Class A common share, as compared to net earnings of $6,059,000, or $2.68 per diluted Class A common share, for the first nine months of fiscal 2025.
THIRD QUARTER FISCAL 2026 COMPARED TO THIRD QUARTER FISCAL 2025
Consolidated net revenues totaled $27.4 million for the third quarter of fiscal 2026 as compared to $30.9 million for the third quarter of fiscal 2025. Sales related to our western/lifestyle boot products for the third quarter of fiscal 2026 totaled $19.7 million as compared to $20.2 million for the third quarter of fiscal 2025. This decrease in net revenues was mainly driven by a decrease in our Laredo brand. Revenues from our work boot products decreased from $8.7 million for the third quarter of fiscal 2025 to $7.9 million for the third quarter of fiscal 2026. This was primarily a result of decreased orders on military boots. Additionally, third quarter revenues for fiscal 2025 included $2.0 million in land sales through our affiliate American Mortgage Investment Company (AMIC).
Consolidated gross profit for the third quarter of fiscal 2026 amounted to approximately $6.9 million as compared to $9.8 million for the third quarter of fiscal 2025. Gross profit, as a percentage of net revenues, decreased from 31.7% for the third quarter of fiscal 2025 to 25.2% for the third quarter of fiscal 2026. Gross profit in the prior year was positively affected by $1.6 million from the land sale mentioned above. Our margins have also been negatively impacted by tariffs, as we paid $0.8 million in the third quarter for tariffs. Based on current information, we are seeking a refund for these tariff costs (as well as tariff costs for prior periods) but there can be no assurance we will receive any such refunds.
Consolidated selling, general and administrative expenses totaled approximately $6.1 million for the third quarter of fiscal 2026 as compared to $6.3 million for the third quarter of fiscal 2025. This decrease resulted primarily from decreased commissions, offset by an increase in marketing expenses.
As a result of the above, the consolidated operating profit for the third quarter of fiscal 2026 amounted to $0.8 million as compared to $3.5 million for the third quarter of fiscal 2025.
FIRST NINE MONTHS FISCAL 2026 COMPARED TO FIRST NINE MONTHS FISCAL 2025
Consolidated net revenues for the first nine months of fiscal 2026 totaled $86.6 million as compared to $87.1 million for the first nine months of fiscal 2025. Our western and lifestyle product sales totaled $63.8 million for the first nine months of fiscal 2026 as compared to $61.6 million for the first nine months of fiscal 2025. This increase in net revenues was driven by an increase in our Dan Post and Dingo brands, offset by a decrease in our Laredo and El Dorado brands. Net revenues from our work boot business decreased from $24.2 million for the first nine months of fiscal 2025 to $23.3 million for the first nine months of fiscal 2026. This decrease was in our Dan Post and Laredo work brands.
Consolidated gross profit totaled $22.1 million, or 25.6%, for the first nine months of fiscal 2026 as compared to $25.3 million, or 29.0%, for the first nine months of fiscal 2025. This decrease was not only driven by the land sale mentioned above, but also $3.0 million in tariffs paid in this fiscal year. Based on current information, we are seeking a refund for these tariff costs (as well as tariff costs for prior periods) but there can be no assurance we will receive any such refunds.
Consolidated selling, general and administrative expenses totaled approximately $19.5 million for the first nine months of fiscal 2026 as compared to $19.2 million for the first nine months of fiscal 2025. This increase resulted primarily from increased marketing expenses.
As a result of the above, the consolidated operating profit amounted to $2.6 million for the first nine months of fiscal 2026 as compared to $6.1 million for the first nine months of fiscal 2025.
On April 29th, 2026, McRae Industries, Inc. received a contract award from The United States Government DLA Troops Support for Airforce temperate weather boots. This contract has a 36 month ordering period with first delivery no later than 150 days from contract award. The estimated dollar amount for the award is $15,441,664.
Financial Condition and Liquidity
Our financial condition remained strong at May 2, 2026 as cash and cash equivalents totaled $20.6 million as compared to $31.6 million at August 2, 2025. Our working capital decreased from $85.9 million at August 2, 2025 to $72.5 million at May 2, 2026.
We currently have two lines of credit totaling $6.75 million, all of which was fully available at May 2, 2026. 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 2027. Our $5.0 million line of credit, which also expires in January 2027, is secured by the inventory and accounts receivable of our Dan Post Boot Company subsidiary.
For the first nine months of fiscal 2026, operating activities provided approximately $4.5 million of cash. Net earnings, as adjusted for depreciation and other non-cash items, contributed approximately $3.2 million of cash. Increased accounts receivable and decreased employee benefits liabilities used approximately $2.0 million of cash. Decreased accounts payable and other assets provided approximately $2.5 million of cash.
Net cash used by investing activities totaled approximately $13.6 million, primarily due to the purchase of fixed assets and securities, offset by the sale of securities.
Net cash used in financing activities totaled $1.8 million, which was used primarily for dividend payments and the repurchase of stock.
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 2026.
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, the potential impact of tariffs on our business, uncertainties concerning the tariff refund program announced in March 2026, 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)
May 2,2026
August 2,2025
ASSETS
Current assets:
Cash and cash equivalents
$20,634
$31,593
Equity investments
9,383
8,730
Debt securities
4,963
6,786
Accounts receivable, net
18,945
17,836
Inventories, net
24,325
24,599
Income tax receivable
350
639
Prepaid expenses and other current assets
577
1,611
Total current assets
79,178
91,794
Property and equipment, net
8,824
5,274
Other assets:
Deposits
3
14
Right to Use Asset
1,174
1,589
Real estate held for investment
2,321
2,311
Debt securities
16,327
5,032
Trademarks
2,824
2,824
Total other assets
22,648
11,770
Total assets
$110,650
$108,838
McRae Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
May 2,2026
August 2,2025
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$3,577
$2,093
Accrued employee benefits
548
1,232
Accrued payroll and payroll taxes
973
823
