Charles & Colvard(US:CTHR)2024-05-03 14:26Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $5.3 million, down 21% compared to Q3 FY 2023, but showed a sequential improvement of 12 basis points from Q1 FY 2024 and 3 basis points from Q2 FY 2024 [6][12] - The net loss for Q3 2024 was $3.6 million or $0.12 loss per diluted share, an improvement from a net loss of $8.4 million or $0.28 loss per diluted share in the year-ago period [16] - Operating expenses increased by 13% from the year-ago quarter, with sales and marketing expenses also rising by 13% to $3.7 million [15][16] Business Line Data and Key Metrics Changes - Net sales for the traditional segment (wholesale and brick-and-mortar) totaled $1.2 million, representing 22% of total net sales compared to 30% in the previous year [13] - Online channels segment net sales totaled $4.1 million, representing 77% of total net sales, up 7% from a year ago [36] - Finished jewelry net sales represented 93% of total sales, up from 80% in the same quarter last year, while finished net sales in the traditional segment decreased by 71% [37] Market Data and Key Metrics Changes - Domestic sales from charlesandcolvard.com accounted for 98% of all sales in Q3, with international sales making up only 2% [14] - Inventory decreased by 24% for the quarter, reflecting the company's efforts to refine its jewelry offerings [9] Company Strategy and Development Direction - The company is focusing on penetrating the low-cost consumer market through website updates and increased marketing efforts, including partnerships with influencers [2] - A new wholesale portal, charlesandcolvarddirect.com, was launched to incentivize independent jewelers to buy directly, aiming to enhance competitiveness [3] - The company is rebranding its moissanite product line to Everbright to better position itself in the market [31] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term value despite recent revenue declines, noting improvements in sequential quarters [6] - The company is addressing margin pressures by reviewing vendor agreements and managing advertising spend [7] - Management acknowledges challenges in the luxury market but believes in the potential of lab-grown gems as consumer awareness increases [30] Other Important Information - The company reported a gross margin of 23%, down from 32% in the previous year, primarily due to rising commodity prices and increased promotional pressures [38] - Working capital remained strong at $12.7 million, with $500,000 in short-term outstanding debt [17] Q&A Session Summary Question: Is the stock buyback program still in place? - Yes, the company has $4.5 million remaining in the repurchase program and management believes it is an opportunity at current prices [24] Question: Will management continue to buy back stock? - Management is focused on achieving profitability and is evaluating the return on advertising spend while considering stock buybacks [25][26] Question: Why draw on the credit facility with a high cash balance? - The company aims to maintain liquidity and has drawn $500,000 from the credit facility to ensure operational flexibility [66]