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Crown Crafts Reports Fiscal 2023 First Quarter Results

·5 min read
Crown Crafts, Inc.
Crown Crafts, Inc.
  • Improved gross profit of 32.8% of net sales

  • Balance sheet remains strong

  • Board declares a quarterly dividend of $0.08 per share

GONZALES, La., Aug. 17, 2022 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today reported results for the first quarter of fiscal year 2023, which ended July 3, 2022.

“Although it was a challenging quarter, our customer relationships remain strong, we have maintained our shelf space at our retailers, and our partnerships remain strong as we navigate the current market challenges,” said Olivia W. Elliott, President and Chief Executive Officer of the Company. “While consumers became more price-sensitive during the quarter in response to rising inflation and retailers began reducing their purchases as their inventories increased, we believe Crown Crafts remains in a strong position to withstand these challenges. We are continuing to implement our long-term strategic plan, which includes expanding in the toy category, growing our product offerings both organically and through acquisition, increasing our direct sales to consumers, reducing operating costs, and making further investments to enhance our technology and improve our organizational structure.”

Financial Results

Net income for the first quarter of fiscal 2023 was $1.4 million, or $0.14 per diluted share, on net sales of $15.7 million, compared with net income of $2.7 million, or $0.27 per diluted share, on net sales of $18.7 million for the first quarter of fiscal 2022. Gross profit for the current-year quarter was 32.8% of net sales, up from 24.9% of net sales in the prior-year quarter.

Prior-year net income was impacted favorably by a pre- and post-tax $1,985,000 gain on extinguishment of debt related to the forgiveness of the Company’s Paycheck Protection Program Loan (the “PPP Loan”). The prior-year quarter also included net sales and a net loss of $631,000 and $802,000, respectively, associated with the Carousel Designs business, which ceased operations in May 2021.

Excluding the impact of the PPP Loan and Carousel from the prior-year quarter, net sales, gross margin percentage, net income and diluted earnings per share would have been $18.1 million, 29.3%, $1.5 million and $0.15, respectively.

Quarterly Cash Dividend

The Company also announced that its Board of Directors declared a quarterly cash dividend on the Company’s Series A common stock of $0.08 per share, which will be paid on October 7, 2022, to stockholders of record at the close of business on September 16, 2022. “The Board is pleased that our balance sheet remains strong and we can continue to reward our stockholders with an attractive dividend as a result of our Company’s financial strength, outstanding team and exciting prospects for the future,” Elliott said.

Conference Call

The Company will host a teleconference today at 1:00 p.m. Central Daylight Time to discuss the Company’s results, during which interested individuals will be given the opportunity to ask appropriate questions. To join the teleconference, dial (844) 861-5504 and ask to be joined into the Crown Crafts, Inc. call. The teleconference can also be accessed in listen-only mode by visiting the Company’s website at www.crowncrafts.com. The financial information to be discussed during the teleconference may be accessed prior to the call on the investor relations portion of the Company’s website.   A telephone replay of the teleconference will be available one hour after the end of the call through 4:00 p.m. Central Standard Time on November 17, 2022. To access the replay, dial (877) 344-7529 in the United States or (412) 317-0088 from international locations and refer to conference number 8238401.

About Crown Crafts, Inc.

Crown Crafts, Inc. designs, markets and distributes infant, toddler and juvenile consumer products. Founded in 1957, Crown Crafts is one of America’s largest producers of infant bedding, toddler bedding, bibs, toys and disposable products. The Company operates through its two wholly-owned subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc., which market a variety of infant, toddler and juvenile products under Company-owned trademarks, as well as licensed collections and exclusive private label programs. Sales are made directly to retailers such as mass merchants, large chain stores and juvenile specialty stores. For more information, visit the Company’s website at www.crowncrafts.com.

The foregoing contains forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such statements are based upon management’s current expectations, projections, estimates and assumptions. Words such as “expects,” “believes,” “anticipates” and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. These risks include, among others, general economic conditions, including changes in interest rates, in the overall level of consumer spending and in the price of oil, cotton and other raw materials used in the Company’s products, changing competition, changes in the retail environment, the Company’s ability to successfully integrate newly acquired businesses, the level and pricing of future orders from the Company’s customers, the extent to which the Company’s business is concentrated in a small number of customers, the Company’s dependence upon third-party suppliers, including some located in foreign countries, customer acceptance of both new designs and newly-introduced product lines, actions of competitors that may impact the Company’s business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company’s dependence upon licenses from third parties. Reference is also made to the Company’s periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company’s results of operations and financial condition. The Company does not undertake to update the forward-looking statements contained herein to conform to actual results or changes in our expectations, whether as a result of new information, future events or otherwise.

Contact:

Craig J. Demarest
Vice President and Chief Financial Officer
(225) 647-9118
cdemarest@crowncrafts.com

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SELECTED FINANCIAL DATA
In thousands, except percentages and per share data
(Unaudited)

 

 

 

 

Three-Month Periods Ended

 

July 3, 2022

June 27, 2021

Net sales

$

15,710

 

 

$

18,712

 

Gross profit

 

5,153

 

 

 

4,656

 

Gross profit percentage

 

32.8

%

 

 

24.9

%

Income from operations

 

1,740

 

 

 

1,290

 

Gain on extinguishment of debt

 

-

 

 

 

1,985

 

Income before income tax expense

 

1,900

 

 

 

3,274

 

Income tax expense

 

466

 

 

 

609

 

Net income

 

1,434

 

 

 

2,665

 

Basic and diluted earnings per share

$

0.14

 

 

$

0.27

 

 

 

 

Weighted Average Shares Outstanding:

 

 

Basic

 

10,076

 

 

 

10,004

 

Diluted

 

10,100

 

 

 

10,056

 

CONSOLIDATED BALANCE SHEETS
SELECTED FINANCIAL DATA
In thousands

 

July 3, 2022

 

 

(Unaudited)

April 3, 2022

Cash and cash equivalents

$

4,141

 

 

$

1,598

 

Accounts receivable, net of allowances

 

17,644

 

 

 

23,226

 

Inventories

 

26,350

 

 

 

20,653

 

Total current assets

 

49,363

 

 

 

46,508

 

Operating lease right of use assets

 

2,151

 

 

 

2,423

 

Finite-lived intangible assets - net

 

2,534

 

 

 

2,654

 

Goodwill

 

7,125

 

 

 

7,125

 

Total assets

$

62,559

 

 

$

60,155

 

 

 

 

Total current liabilities

 

13,263

 

 

 

11,786

 

Operating lease liabilities, noncurrent

 

570

 

 

 

809

 

 

 

 

Shareholders’ equity

 

46,674

 

 

 

45,801

 

Total liabilities and shareholders’ equity

$

62,559

 

 

$

60,155