Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today reported
results for the fiscal 2019 second quarter, which ended September
30, 2018.
“We are pleased to report our second quarter
performance, which includes a 24.8% increase in sales, along with
considerable improvements in gross margin and net income,” said E.
Randall Chestnut, Chairman, President and Chief Executive Officer.
“During the past twelve months, we have navigated unusually
challenging retail conditions, including the bankruptcy and
liquidation of one of our largest customers. Throughout these
challenges, we maintained a strong financial position, while
pursuing opportunities through acquisition, product innovation and
new distribution channels. We are very encouraged by the second
quarter results, which reflect the impact of those initiatives, and
we remain excited about our future prospects for profitable
growth.”
“With our continuing evolution as a company, we
saw a need to update our brand identity in order to serve as a
representation of our growth and our relevance in this shifting
industry,” Chestnut continued. “We have already introduced a new
Crown Crafts logo and will be launching a new website and refreshed
digital presence later this year. In addition, two of our
subsidiaries, Crown Crafts Infant Products, Inc. and Hamco, Inc.,
are in the process of being formally rebranded and renamed NoJo
Baby & Kids, Inc. and Sassy Baby, Inc., respectively. We
believe these changes better reflect the breadth of the Crown
Crafts portfolio and more clearly convey the value of our brands to
consumers and our retail partners.”
Financial Results
Net income for the second quarter of fiscal 2019
was $1.8 million, or $0.18 per diluted share, on net sales of $20.5
million, compared with net income of $725,000, or $0.07 per diluted
share, on net sales of $16.5 million for the second quarter of
fiscal 2018. Gross profit for the current year quarter
increased to 31.0% of net sales from 30.5% of net sales in the
prior year quarter.
For the six-month fiscal period, net income was
$2.1 million, or $0.21 per diluted share, on net sales of $36.0
million, compared with net income of $1.2 million, or $0.12 per
diluted share, on net sales of $30.1 million for the first six
months of fiscal 2018. Gross profit for the six-month period
was 29.2% of net sales, up from 28.6% in the prior-year period.
During the current year-to-date period, the
Company incurred $210,000 in pre-tax expenses to move Sassy-branded
inventory from Grand Rapids, Michigan to the Company’s facility in
Compton, California. On an after-tax basis, these costs
negatively affected the year-to-date period by $161,000. In
the prior year, the Company recorded certain post-tax expenses
totaling $405,000 and $483,000 in the three and six-month periods
of fiscal year 2018, respectively, which did not reoccur in fiscal
year 2019.
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
January 4, 2019 to stockholders of record at the close of business
on December 14, 2018. “We are pleased to once again reward
our stockholders for their continued support with a dividend
payment,” Chestnut said.
Conference Call
The Company will host a teleconference today at
1:00 p.m. Central Standard 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 15, 2018. To access the
replay, dial (877) 344-7529 in the United States or (412) 317-0088
from international locations and refer to conference number
10124119.
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 and developmental toys.
The Company operates through its three wholly owned subsidiaries,
NoJo Baby & Kids, Inc., Sassy Baby, Inc. and Carousel Designs,
LLC, 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, as well as directly to consumers
through www.babybedding.com. 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:
Olivia W.
Elliott |
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Vice
President and Chief Financial Officer(225)
647-9124oelliott@crowncrafts.com |
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or |
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Halliburton
Investor Relations(972) 458-8000 |
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CROWN CRAFTS, INC. AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF INCOMESELECTED FINANCIAL DATAIn thousands, except
percentages and per share data(Unaudited)
|
|
Three-Month Periods Ended |
|
Six-Month Periods Ended |
|
|
September 30, 2018 |
October 1, 2017 |
|
September 30, 2018 |
October 1, 2017 |
|
|
|
Net sales |
|
$ |
20,536 |
|
$ |
16,461 |
|
|
$ |
35,996 |
|
$ |
30,108 |
|
Gross profit |
|
|
6,370 |
|
|
5,022 |
|
|
|
10,498 |
|
|
8,624 |
|
Gross profit
percentage |
|
|
31.0 |
% |
|
30.5 |
% |
|
|
29.2 |
% |
|
28.6 |
% |
Income from
operations |
|
|
2,543 |
|
|
1,215 |
|
|
|
2,986 |
|
|
1,916 |
|
Income before income
tax expense |
|
|
2,456 |
|
|
1,225 |
|
|
|
2,800 |
|
|
1,946 |
|
Income tax expense |
|
|
647 |
|
|
500 |
|
|
|
727 |
|
|
703 |
|
Net income |
|
|
1,809 |
|
|
725 |
|
|
|
2,073 |
|
|
1,243 |
|
Basic earnings per
share |
|
$ |
0.18 |
|
$ |
0.07 |
|
|
$ |
0.21 |
|
$ |
0.12 |
|
Diluted earnings per
share |
|
$ |
0.18 |
|
$ |
0.07 |
|
|
$ |
0.21 |
|
$ |
0.12 |
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding: |
|
|
|
|
|
|
Basic |
|
|
10,086 |
|
|
10,074 |
|
|
|
10,078 |
|
|
10,059 |
|
Diluted |
|
|
10,088 |
|
|
10,078 |
|
|
|
10,080 |
|
|
10,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETSSELECTED FINANCIAL
DATAIn thousands
|
September 30, 2018 |
|
|
(Unaudited) |
April 1, 2018 |
Cash and cash
equivalents |
$ |
154 |
$ |
215 |
Accounts receivable,
net of allowances |
|
16,658 |
|
18,498 |
Inventories |
|
19,780 |
|
19,788 |
Total current
assets |
|
37,855 |
|
39,754 |
Finite-lived intangible
assets - net |
|
6,858 |
|
7,272 |
Goodwill |
|
7,125 |
|
7,125 |
Total assets |
$ |
54,291 |
$ |
56,581 |
|
|
|
Total current
liabilities |
|
8,912 |
|
6,788 |
Long-term debt |
|
4,378 |
|
9,458 |
|
|
|
Shareholders’
equity |
|
39,879 |
|
39,318 |
Total liabilities and
shareholders’ equity |
$ |
54,291 |
$ |
56,581 |
|
|
|
|
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