Crown Crafts, Inc. (NASDAQ:CRWS) Q4 2024 Earnings Conference Call June 28, 2024 9:00 AM ET Company Participants John Beisler - Senior Vice President, Three Part Advisors Olivia Elliott - President and Chief Executive Officer Craig Demarest - Vice President and Chief Financial Officer Conference Call Participants Douglas Ruth - Lenox Financial Services John Deysher - Pinnacle Value Fund Dennis Scannell - Rutabaga Capital Operator Good day and welcome to the Crown Crafts, Inc. Fourth Quarter Fiscal Year 2024 ...

● Net sales of $87.6 million, compared to $75.1 million in fiscal 2023 About Crown Crafts, Inc. Fourth Quarter Summary Fiscal Year 2024 Results CROWN CRAFTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME SELECTED FINANCIAL DATA In thousands, except percentages and per share data For immediate release June 28, 2024 Gonzales, Louisiana – Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the "Company") today reported results for the fourth quarter and fiscal year 2024, which ended March 31, 2024. ● Gross margin ...

Acquisition and Investments - The Company acquired Manhattan Group, LLC for a purchase price of $17.0 million, funded by available cash and borrowings[25]. - The acquisition of Manhattan and MTE was completed, impacting cash flows significantly with a net cash outflow of $16,136,000 in fiscal year 2023[183]. - The Company's ability to pursue acquisitions and investments may be limited by debt covenants, affecting its growth strategy and financial flexibility[72]. Sales and Revenue - Total net sales increased to $87.6 million for the fiscal year ended March 31, 2024, compared to $75.1 million in the previous fiscal year, representing a 16.8% increase[95]. - International sales represented 8% of total gross sales in fiscal year 2024, up from 5% in fiscal year 2023[27]. - Sales of products marketed under the Company's trademarks accounted for 38% of total gross sales in fiscal year 2024, compared to 35% in fiscal year 2023[31]. - The Company's top two customers, Walmart Inc. and Amazon.com, represented approximately 61% of gross sales in fiscal year 2024, with Walmart at 42% and Amazon at 19%[36][44]. - Sales of licensed products constituted 40% of gross sales in fiscal year 2024, including 24% from agreements with Disney[34][45]. - Approximately 20% of annual gross sales typically occur during the first fiscal quarter (April through June)[37]. Financial Performance - Net income for the fiscal year was $4.9 million, down 13.4% from $5.7 million in the previous year[94]. - Gross profit increased by $3.2 million, with gross profit margin slightly decreasing from 26.4% to 26.2% of net sales[96]. - Marketing and administrative expenses rose by $3.5 million, increasing from 16.9% to 18.4% of net sales[97]. - The effective tax rate on continuing operations was 21.4% for the fiscal year ended March 31, 2024, down from 23.2% in the prior year[98]. - The Company reported a basic earnings per share of $0.48 for fiscal year 2024, down from $0.56 in fiscal year 2023[178]. - Net cash provided by operating activities decreased from $7.7 million to $7.1 million year-over-year[104]. - Net cash used in investing activities was $193,000, significantly lower than $16.9 million in the previous fiscal year, primarily due to the prior year's acquisition payment[105]. - Net cash used in financing activities was $7.8 million for the fiscal year ended March 31, 2024, compared to $9.3 million in cash provided by financing activities for the fiscal year ended April 2, 2023[106]. Assets and Liabilities - Total assets decreased from $90,972,000 as of April 2, 2023, to $82,706,000 as of March 31, 2024, representing a decline of approximately 9.3%[173]. - Current liabilities decreased from $13,057,000 to $10,461,000, a reduction of about 19.5%[173]. - Long-term debt decreased from $12,674,000 to $8,112,000, a decrease of approximately 36.1%[173]. - Cash and cash equivalents decreased from $1,742,000 to $829,000, a decline of about 52.5%[173]. - Accounts receivable decreased from $20,740,000 to $18,584,000, a reduction of approximately 10.4%[173]. - Inventories decreased from $34,211,000 to $29,709,000, a decline of about 13.1%[173]. - Total current assets decreased from $60,375,000 to $54,824,000, a reduction of approximately 9.2%[173]. - Operating lease liabilities decreased from $17,316,000 to $15,725,000, a decrease of about 9.2%[173]. Risks and Challenges - The Company's inability to adapt to changing consumer preferences could adversely affect revenues, as the industry is characterized by rapid product development[48]. - The decline in birthrate in the United States may lead to reduced demand for the Company's products, increased order cancellations, and pressure on product prices[51]. - Significant increases in freight costs and raw material prices, including cotton and oil, could adversely affect the Company's profitability if these costs cannot be passed on to customers[52]. - The Company faces risks related to intellectual property, including potential civil judgments and impairment charges that could adversely affect its competitive position[53]. - Disruptions from contagious diseases, such as COVID-19, could negatively impact the Company's revenues, earnings, and cash flows, necessitating significant operational adjustments[54][56]. - The competitive landscape in the infant and toddler consumer products industry is intense, with larger competitors potentially impacting the Company's sales and revenues[57]. - The Company's sourcing is heavily reliant on foreign manufacturers, particularly in China, which poses risks related to international trade regulations and potential disruptions[63][64]. - Recalls or product liability claims could lead to increased costs and decreased consumer demand, negatively impacting the Company's reputation and financial performance[60]. Employee and Operational Information - The Company had 162 full-time employees as of May 31, 2024, with no union representation[30]. - The Company maintains a foreign representative office in Shanghai, China, for production coordination and vendor oversight[33]. - The Company’s products are primarily sourced from foreign and domestic contract manufacturers, with a significant concentration in China[32]. - The Company is monitoring inflation's impact on operations and may need to adjust prices to mitigate future effects[100]. Financial Reporting and Compliance - The Company reported no changes in Internal Control over Financial Reporting during the fiscal quarter ended March 31, 2024[134]. - There were no modifications to trading arrangements by directors or officers during the quarter ended March 31, 2024[135]. - The consolidated financial statements include balance sheets as of March 31, 2024, and April 2, 2023, along with income statements for the fiscal years ended March 31, 2024, and April 2, 2023[144]. - The Company’s financial statement schedule includes valuation and qualifying accounts, with specific details on accounts receivable[145]. - The Company capitalizes patent costs to be amortized over the expected life of the patent, with significant management judgment involved in evaluating future economic benefits[205]. - The Company accounts for acquisitions using the acquisition method, measuring assets acquired and liabilities assumed at fair value as of the acquisition date[216]. - The Company calculates basic earnings per share using a weighted average of shares outstanding, with diluted shares calculated using the treasury stock method[217]. - The Company reviews inventory for obsolescence and establishes allowances as necessary, impacting the cost of products sold and net income[202]. - The Company adopted ASU No. 2016-13 effective April 3, 2023, with no significant impact on its financial position due to factoring agreements[218]. - ASU No. 2023-06 was issued in October 2023 to improve disclosure requirements, with no anticipated significant impact on the Company's financial position[219]. - The Company plans to adopt ASU No. 2023-07 effective April 1, 2024, to enhance reportable segment disclosures retrospectively[220]. - ASU No. 2023-09 was issued in December 2023 to improve income tax disclosures, with the Company currently evaluating its impact[221].

Declared quarterly dividend of $0.08 per share of Series A common stock "Fiscal 2024 was a transitional year for our company, as we focused on the integration of Manhattan Toy and continued to proactively manage our business to address the ongoing effects of the inflationary environment and its negative impact on consumers' discretionary spending," said Olivia Elliott, President and Chief Executive Officer. "We are very encouraged by the progress with Manhattan Toy's product development and will continue to ...

Company Overview - Crown Crafts, Inc. designs, markets, and distributes infant, toddler, and juvenile consumer products, and is one of America's largest producers of infant bedding, toddler bedding, bibs, toys, and disposable products [8] - The company operates through wholly owned subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc., marketing a variety of products under company-owned trademarks, licensed collections, and exclusive private label programs [8] Upcoming Financial Results - Crown Crafts, Inc. plans to release its fourth quarter and full year results for fiscal 2024 before the market opens on June 28, 2024 [6] - A teleconference will be hosted by the President and CEO, Olivia W. Elliott, and the Vice President and CFO, Craig J. Demarest, at 8:00 a.m. Central Daylight Time to discuss the results and answer questions [6] Teleconference Details - Interested individuals can join the teleconference by dialing (844) 861-5504 or by visiting the company's website for a listen-only mode [2] - A replay of the teleconference will be available one hour after the call until 4:00 p.m. Central Daylight Time on September 28, 2024 [7]

GONZALES, La., May 14, 2024 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ:CRWS) (the "Company") announced today that its Board of Directors has declared a quarterly cash dividend on its Series A common stock of $0.08 per share to be paid on July 5, 2024 to stockholders of record at the close of business on June 14, 2024. 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 produ ...

GONZALES, La., April 17, 2024 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ:CRWS) (the "Company") today announced that Olivia W. Elliott, President and Chief Executive Officer, and Craig J. Demarest, Vice President and Chief Financial Officer, will present at the 27th Annual Burkenroad Reports Investment Conference on Friday, April 26, 2024, to be held at The Westin New Orleans Hotel.  The Company's presentation is scheduled for 9:30 a.m. Central Daylight Time. About Burkenroad Reports Burkenroad Reports w ...

GONZALES, La., April 17, 2024 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today announced that Olivia W. Elliott, President and Chief Executive Officer, and Craig J. Demarest, Vice President and Chief Financial Officer, will present at the 27th Annual Burkenroad Reports Investment Conference on Friday, April 26, 2024, to be held at The Westin New Orleans Hotel.  The Company’s presentation is scheduled for 9:30 a.m. Central Daylight Time. About Burkenroad Reports Burkenroad Repor ...

Financial Data and Key Metrics Changes - Net sales for the third quarter of fiscal 2024 increased approximately 25% to $23.8 million compared to $19 million in the prior year quarter, attributed to the addition of Manhattan Toy, which contributed $6 million in net sales [41] - Gross profit for the quarter was 27% compared to 23.7% in the third quarter of fiscal 2023, indicating a return to historical margin levels [5] - Net income for the quarter was $1.7 million or $0.17 per diluted share compared to net income of $1.3 million or $0.13 per diluted share in the prior year quarter [5] - Cash and cash equivalents at the end of the third quarter were $683,000 compared to $1.7 million at the end of fiscal 2023 [32] Business Line Data and Key Metrics Changes - Inventory at the end of the quarter was $34.9 million compared to $34.2 million at the end of fiscal 2023, with NoJo and Sassy inventory levels declining from $25.8 million last year to $22.7 million this year [4] - Marketing and administrative expenses increased to $4.1 million in the current year quarter from $2.7 million in the prior year quarter, primarily due to expenses associated with Manhattan Toy [5] - The Toy category is projected to represent nearly half of overall sales for fiscal 2024, up from just 17% at the end of fiscal 2023 [6] Market Data and Key Metrics Changes - The reopening of 11 buybuy Baby stores is expected to provide gradual benefits as they roll out more locations, which will enhance consumer access to products [14] - The company continues to face economic pressures affecting consumer discretionary income, particularly at the lower end of the income scale due to higher interest rates and the resumption of student loan repayments [14] Company Strategy and Development Direction - The company is focused on long-term strategic growth, particularly in the Toy category through market share expansion within Sassy and Manhattan Toy [6] - Plans to enter new and adjacent product categories through organic growth and strategic acquisitions are underway, with product development aimed at bringing select items from the Manhattan Toy lineup into Walmart [33] - The company is exploring operational efficiencies, including the potential combination of warehouses and possibly relocating to reduce manufacturing costs [45][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a more favorable economic outlook as the year progresses, despite ongoing inflationary pressures on consumers [30] - The long-term prospects of the company remain favorable, supported by a strong track record and commitment to delivering shareholder value [43] Other Important Information - The company paid a regular quarterly dividend of $0.08 per share and declared the next dividend to be paid in April, offering an annualized yield of just over 6% based on the previous closing price [32] Q&A Session Summary Question: Can you talk about the success in lowering Manhattan Toy manufacturing costs? - The company has managed to achieve some decreases in manufacturing costs across various channels and is hopeful for further reductions as they deplete higher-cost inventory [45][46] Question: What is happening with the potential combination of warehouses? - The company is in the early stages of exploring warehouse locations, possibly outside California, with a commitment to a long-term solution expected within the next 18 months [47]

GONZALES, La., Feb. 14, 2024 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ:CRWS) (the "Company") today reported results for the third quarter fiscal year 2024, which ended December 31, 2023. Third Quarter Summary Net sales of $23.8 million, an increase of 25.2% from the prior-year quarter Gross profit as a percentage of net sales of 27.0%, up from 23.7% in the third quarter of fiscal 2023Net income of $1.7 million, or $0.17 per diluted share, compared to $1.3 million or $0.13 per diluted share in the prior ...