Financial Performance - Net sales decreased to $23.3 million for the three months ended December 29, 2024, compared to $23.8 million for the same period in 2023, a decrease of $450,000 or 1.9%[62] - For the nine months ended December 29, 2024, net sales were $64.0 million, down from $65.1 million in the same period in 2023, a decrease of $1.0 million or 1.6%[63] - Net income for the three months ended December 29, 2024, was $893,000, a decrease of $809,000 or 47.5% compared to $1.7 million in Q3 2023[62] - Gross profit decreased by $336,000, from 27.0% of net sales in Q3 2023 to 26.1% in Q3 2024[64] Expenses - Marketing and administrative expenses increased by $290,000, rising from 17.3% of net sales in Q3 2023 to 18.8% in Q3 2024[67] - Factoring fees for the three-month periods ended December 29, 2024, and December 31, 2023, were $115,000 and $106,000, respectively, while for the nine-month periods, they were $283,000 and $265,000[80] Cash Flow and Investments - Net cash provided by operating activities increased from $4.1 million for the nine-month period ended December 31, 2023, to $7.0 million for the nine-month period ended December 29, 2024[75] - Net cash used in investing activities increased significantly to $17.0 million, primarily due to a $16.4 million payment for the Acquisition[76] Debt and Credit - As of December 29, 2024, the balance on the revolving line of credit was $13.7 million, with $15.3 million available based on eligible accounts receivable and inventory[78] - The Company had $20.9 million of indebtedness at a variable interest rate, with an annual net income decrease of approximately $162,000 for each one percentage point increase in interest rates[85] - The Company has modified its financing agreement with CIT to increase the Excess Availability required for its revolving credit line from $7,000,000 to $7,500,000[82] - The Company has entered into agreements with CIT to waive compliance with the fixed charge coverage ratio for the fiscal years ending March 30, 2025, and March 29, 2026[82] Customer Dependency and Product Sales - The Company's financial results are significantly dependent on its top two customers, which accounted for approximately 61% of gross sales in fiscal year 2024[87] - 40% of the Company's gross sales in fiscal year 2024 were from licensed products, including 24% from agreements with affiliated companies of the Walt Disney Company[87] - Sales of bedding and diaper bags increased by $2.2 million, while sales of bibs, toys, and disposable products decreased by $2.6 million during the three-month period[62] Operational Considerations - The Company believes its cash flow from operations and available funds under the revolving line of credit will be sufficient to meet liquidity needs[83] - The Company bears the responsibility for customer-related adjustments such as returns and discounts, while CIT bears credit losses on assigned accounts receivable[80] - The Company sources products primarily from foreign manufacturers, with significant exposure to commodity price risks in China, particularly for cotton, oil, and labor[86] - The Company acquired Baby Boom, which designs and sells licensed and unlicensed bedding and diaper bag products, since the last annual report[87]
Crown Crafts(CRWS) - 2025 Q3 - Quarterly Report