Charles & Colvard (CTHR) 3 Sep 212021 Q4 Earnings call transcript

Good day, and welcome to the Charles & Colvard Q4 and Full Fiscal Year 2021 Earnings Conference Call and Webcast. [Operator Instructions] This earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date the statement is made. These forward-looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. risks forward-looking there be information these assurance be accurate. of the that will light and can uncertainties, no In prove to is @ir.charlesandcolvard.com/event. Accompanying slide Relations a is of available which section website today's Investor in company's supporting the the call deck PowerPoint be Q&A session will the conclusion at a remarks. hosting company the of The prepared have questions submit? Should like you Please email to you'd ir@charlesandcolvard.com. Please note this event is being recorded. Executive to turn Don and Chief to the O'Connell, over like Officer. conference now would I President Please go ahead.

& that that Charles fourth Thank deemed quarter for what pleased to I'd on for we're company work continues I'm enabled like some Welcome, incredible going resulted of progress year in highlight and And us to full accomplishments fiscal & you, XXXX quarter to an extremely initiatives. everyone. the Today some fiscal the their we report Sarah. the our Colvard and that afternoon. year. to Good of to share history. in the to Charles execute the Colvard's in has results. and I'm team proud complete be its with performance all dedication you Company made highest hard key

for the increase and year $X.X increase million, quarter which year-over-year, fiscal is XXXX. over XXX% QX was XX% revenue Our

million Additionally, for income was from operations $X.X quarter. the

quarter found with approximately $X.XX $X.XX the million PPP earnings diluted earnings. These fiscal margins for Valuation in future $X.X the together loan forgiveness Further year. of the diluted years as allowance reduction recorded gross a approximately benefit driven quarter, fiscal in per strong tax Tax important of and income taxable the remained in note well quarter delivering for Our million we our cumulative that due at the of by projecting three as year resulted XX% our per also for and for XX% factors worth to XXXX. taxable details XX-K. be share share It's our the in earnings to of $X can the positive amount

For and XXXX, revenue $XX.X our fiscal million last increase was increase year, or XX% an year over an over XXXX. fiscal of of XX% year

operations ending $X.X Our for million. from income full XXth fiscal June was the year

Our $XX.X million last to period XX% $XX.X increased cash million same the for year. position by from

increased in XX% by which new level from year from this Clint ahead and XXXX. a and the highlights Our million road a and year as team. the CFO speak past this believe accomplishment $XX.X to reached a Pete, year after working as million, I'll share to is XX% greater about say detail. $XX.X these numbers increase capital our I company it's fair a we've of unwraps fiscal additional

Thanks, provide year fourth of Don. I'll XXXX. fiscal ended for and XX, key Today, June quarter financials summary a

release percentages Additional expect quarter all and tomorrow. prior which be press fiscal file detail year we Form issued found to earnings year to can that our we and unless are comparisons XX-K in otherwise afternoon specified. that note Please the this our end ago

customers channels Overall, our which by demand Finished from XXX%. transactional consists total international sale segment website, million This other online XX% of sales Net net our $X.X border is sales. transactional international distributors. net of our increased and jewelry sales brick-and-mortar net increase net retail increased Channels for while versus our total from an We sales premium strong the due XXX% our with representing direct-to-consumer charlesandcolvard.com, the of XX% for for million XXXX increase charlesandcolvard.com total website, increased as we net Net segment sales. and or drop-ship on to will the an which total of revenue, million for Traditional or to $X.X XX% market pure-play domestic see quarter of representing for XXX% increased QX QX quarter, quarter, retail with $X.X for our net increased totaled moissaniteoutlet.com, XX% Net or wholesale places, XXX%. the jewel charlesandcolvard.com XXX% XXX%. brick-and-mortar for sales includes an continue sales total increase sales $X.X outlets on and of and start jewelry for quarter. XXXX million increased to trade customers. and cross This sales our demand Online

Moving in on, ago versus margin of XX% year we delivered XX% a gross the quarter.

marketing to XXXX, XX%, million $X.X $X.X loss and XX% to total increased XXXX net We compared in reported compared period. a $X.XX quarter. decreased operating total transactions. two net Sales the expenses share, million sales year ago of in year to per Included the XX% the in of loss XX% For with diluted expenses income $X million, representing quarter. G&A and of XX% net expenses income ago the $X.X for share million QX for are or significant quarter or $X.XX net for our per QX increased approximately of diluted

release the valuation First, deferred operating carry an million tax $X.X tax net of our on of we forwards. realized income allowance driven loss our by benefit

we full these can result in upcoming by tax of determined sufficient assets the forgiven realize $XXX,XXX of the carry expectation gain taxable debt in loan, PPP which in was in utilization would to our and our As forwards of future be XXXX. full that June SBA related years to that on income deferred extinguishment tax other

shares to for outstanding the per share shares XX.X was calculation shares XX XXXX. the June million using XX, XX.X June weighted million diluted at approximately XXXX Our earnings at average quarter of compared

that to XX% reported million year a There I'd for fiscal the XXXX, highlights year of sales, fiscal your For $XX.X net are like full two draw to. noteworthy we in XXXX. increase attention from full the year

to segment. as million, total sales, highlighting XX% the First fiscal net increased for Net Channels an our our or sales $XX.X business. XXXX driven growth of XX% year Online e-commerce in

million, total up year in increased sales of net or company. jewelry Second, XX% Finished net XXXX $XX.X ourselves jewelry sales XX% for defining the a of as global fiscal fine sales, further XX% from net to fiscal XXXX

of a sheet. snapshot to on move our let's balance Now

million as last with $XX.X to our Our the at compared cash liquidity of remain solid capital XXXX. XX, June and year we ended total $XX.X fiscal million quarter ended

in Our cash the flow year from the quarter. million to the same ago compared $X.X operations was for quarter

at June XX, Our XX, million. June million $XX.X XXXX by to $XX.X working from capital increased

terms other million new our access Chase Bank, In of we on $X credit facility sources XX, Morgan XXXX White prior to we Finance. secured our which JP July cash the facility of executed of liquidity, Commercial with credit termination following with have

XX, $XX.X as to of total $XX.X inventory proud XX, million, As levels to Don. to that, compared as for With access million of we inventory the million of we delivered. June $XX.X In $XX.X June agreements. jewelry the demand was to June back either as June XX, of was growing XXXX $X.X XXXX. conclusion, XXXX. I'll to today, as jeweled million, XXXX $XX.X turn million of results not compared are XX, of our XXXX XX, Finished credit of have and requirements. over through we June This these maintain Inventory stock facility funds million to call compared

Clint. Thanks that. We appreciate

over same season led believe to executed product for their on set for we fiscal continue to and how we our consumer XXX% QX, initiatives strategic the for XXXX. XXXX. Day the growth a we Day the business in of review Mother's our forth demand period we to ongoing of Operationally the sales to what by our the Let's support campaign Mother's successful the be scale brands. completion in increasing company, product This

global into thereby Mother's marketing going digital forward line connect entered increase shoppable implement technology of in with throughout to in services. this in intimately last meet and shipments. leader initiatives. customers a beginning enhancing receive and a quarter, In the Day, experience time. engage Paycheck in in a one many customer And we the banking a to to with Chase, able that define PPP, direct-to-consumer to quarter, innovative one and forgiveness real significant Beyond allows JP growth were us customers QX, we top in we July, overall Within of commerce with our in support our see and more sales one streaming our relationship the and to Also financial to we resulting continue Program. of XX% Protection strategic Morgan formats,

everywhere truly to can transact. choose we Now they be

Our collaboration. create digital new engage new sales and continue team for with and to content partners launch multiple and channels content across marketing strategic

Amazon Amazon out store Caydia in-store We product we to experience introduced styles. also diamond nearly From assortment Princess the XX online grown grown our revamped new our and rounding shopping diamond Macy's as our such our presence expanded and customer's optimize Lab to quarter, development our offering. cuts standpoint, during Emerald lab

full XXX% sales prior cuts More increase patented increase million signature believe the in equity our XX% we with lab One for differentiates such our the products an our quarter. styles over And in and proprietary our as our were increase brand fuel signature signature collection Additionally, a quarter our fiscal year. fine jewelry year sales, collection the which prior Forever this significant and in finished saw radiant. cushion moissanite increasing space. diamond from competitors helped jewelry further specifically, the we over XX% bolsters We the emerald the elongated year Collectively, net grown and moissanite popularity $X.X quarter. of up new our launched for quarter, patented styles

Caydia adding remains our over belief are experiencing QX XX% continues believe by overall that 'XX. over the quarter, increasing ago fiscal This Forever not and One year business pinnacle share nearly moissanite Lab supports by the demand diamond our Our moissanite but new products business mix. and to brand product market the our our grew to XX% grew increase. that cannibalization, we're We grown

launched our executed in diamond at by button. accomplishments as to thereby holiday. completely the with exclusive Now and Cree. premium strong giving supply position Caydia moissanite of packaging gems. grown consumers relisted our Macy's, diamonds back quarter, look & We our grown primary assortment experience We biodegradable, that holiday of strategic season, choice we with our the giving in the partnership top and Colvard premium better notable doors, We deepened across we website, values. We aligned launched demographics. renegotiate all the launching were Charles the moissaniteoutlet.com year. Index. Microcap the transformed choice additional agreement that in on lab our customers time an in-store redesigned we grown a property Russell a brand moissanite program customer click take ourselves and expanding to recycled, for lab the brand, on recap, at our in Lab the To XX our enhancing a let's We be product an with the provider our between reflected We upon some throughout

a helped All share increase fiscal us revenue, XXXX. in XXX% over believe be is a which the revenue than of year-over-year. deliver in And price a million which to strong increase $XX.X we more $XX what million in

back look what's a next. take let's So at

about remain on what's Let's strong talk we're next trajectory. to planning growth how and the

our loyal very content feel brand to strategy. our grow will mean? This our line In products executive enhance customers our expand within growth. to production who and own to art We consumers styles signature and reach by Going does a top channels new this in success encourage exclusively expand forward, We're stores RTP and omni explore channels. as relationships the collection our that is see, in out continue presence, customer showcase way. continue want And quest building is shopping. while host implementation order media other key we in our our celebrity of technology our we will well existing and allow we to This a increase our our Bambuser more is influencer person. platform signature state our as products streaming leading bolster explore interaction overall further for plan will also element esteemed crucial the A sales, ideal help channel to LVMH, our setting believe the and our and Expansion for collections. do new to and streaming a this, us XXXX. plan order product events and to where studio Bambuser's giving special meaningful direct-to-consumer business. they're platform. excited initiatives all progression we our of a join engagement. introduce This to on will us brands online personal customers website provide We luxury such accomplishing and add for a to list as additional develop believe of that which expand will natural capabilities brand showcase headquarters brand offerings innovative presence, awareness live with allows this engagement, plan them for the group. also shows our touch of to types' live to live styles, To new product our What in

all on customers engagement. meet to seek and our and we fronts see, deepen can you As relationships consumer our

to that as far values. we forward to with core As intend product brand opportunities new and product our align offerings bring explore development,

did further to proprietary the we Caydia needs Just existing product new grown Lab and meet forward as with plan designs customers. this of the existing customers with and diamonds, we come year new categories to

operator sustainable technology We business. like decisions the conscientious to continued to will driven engage and open strategic all areas also questions. efforts back metals with as to your of recycled make and I execute on dedicated potential using help order be we and to our continue for With to to customer. to it in will In team practices shareholder continue order the of today's value. to to transparent our full in are expand we create our and to our across focus lines business. continue the serve over possible The shareholders grow, data informed turn to this order I'd And as will initiatives realize lastly, the fully on that, continued

Our Mac Rondo comes question Instructions] [Operator with first Capital. from Roth

Hey Zabran guys, this is for the on quarter. Congrats on Mac. Mike

Just far on thus to some it's more Caydia online and and give the how could performance you guys contributed sales. start wanted expand of to upon color specifically

Yes.

charlesandcolvard.com. Caydia now only So online offered is right our through

related detail, over we specifically but growing we've So up increase really further don't to of a business. to into go is that, it kind XX% experienced QX,

and the basically and as quarter our So space $X.X And know in that know we because in there. is expand of in elevation moissanite sector We then look increase collections there. if in at to XX% already a our basically, revenue, comparative kind from also Caydia have results, increase there. to from growing you and assortments started the need well. we represented $X.X the our to million Caydia the marketplace of this million growing is revenue overall proof-of-concept We it's be

in kind to future bringing to look us the forward more start So designs. more of and

our signature a that know consumer is the signature gravitating to also We collection. designs and

look that diamonds. weights are accent in growing. the us a also to also stones carat fashion in grown And add diamond the So to Caydia note and increase the that Lab will the I smaller space smaller

that. us look to So also increase to

thus their mix we revenue product product well. increased grown So lab in overall an through increase anticipate Caydia, diamond in and as assortment on the

the basket as where current demand size channel you you're as Got talk seeing well. and it, yes, makes and in that mix sense. AOV is you in and to trending And could pertains the upon can about if specifically web it online conversion environment, expand traffic and

web basically at income conversion so of don't and Yes, and look that the and very net with just know conversion. to are look we making kind the I second there very subjective percentage the Certainly kind rates margin of at discuss it's of part, the the nice revenue. that, we're traffic strong.

could bit diamonds with a we're that talk AOV Lab the a AOV we're increase the what of to up, getting mix a generally So Yes, kind is right around I X,XXX on to slight range Caydia and doing little in publish tell grown charlesandcolvard.com is just the starting website. so relates as about our working. AOV, we you it

that's that, have and two sectors different our direct-to-consumer. our specific it's we on versus to traditional So a side, online AOV because

of Got of if guys Macy's and the just the in Okay. could traditional that channel? general about it. health you within talk terms could in one channel, And more squeeze at sell-through I in, inventory

will the watching come side, come traditional very the progress. of time. side, international that through of going on comp the and it's is that that. us we're versus we getting Yes, on channel prior. how of back we grow out so do but kind and through watch, addressing the XXX% can some COVID that how tell and kind tell tell the and international the in online, really of will be I expand you impact but increase side, did those that we're are nicely, on limited COVID that international, helped the tremendously It then that you channels nice and moving And showing to really speak reality that you to diamonds the on specifically, starting to traditional I I a wholesale from Macy's we kind the there Helzberg as future is well to to look International, to to elevate kind pretty We that factor of to remains kind us have still of of

Our next Ursaner Holdings. question comes with from Jason Bumbershoot and

on Congrats year the results. full

various you in know parts on this. You prepared gave the lot a details of touched I of guys remarks.

Just in trying little to dig more. a

I is right You conference JCK that. pre third announced be to the right the may and Conference before prior think

those markets takeaways And major about any moissanite in share people thinking grown the guys you place in of a Or differences you the brand versus most about are the importantly, not, Colvard's And from are & maybe any the diamond? there then, recognized lab industry? terms missing industry like for gems versus Charles view in kind two market. feel how about if could placed of can in within in you're the within competition. those specific being you Just talk what of Are do choice terms story? people of

house can kind was We've moissanite both tell the seen on jewelry sides the overall I mood get pretty JCK, how pre Hi, kind Charles certainly Yes, Yes, brand is of we much of the in you right. that market, the to Jason, that grown you as doing? Colvard Charles of wanted from the and at significant on understand lab announce year, industry JCK & far move. are as & for of the growth we positive the the Colvard the to is to diamonds. past choice. wanted very

diamonds as quite about industry, So an is I'm well. moissanite. jewelry the industry lab performing Overall, even and talking natural grown and diamonds

more of brand our kind came of and to our kind it we relates Make This of the sure incredible the partners trade that phenomenal play did distribution a of a to really out you, awareness it make shifted our were a and represented. important. was definitely voice positioning has ready marketing in of can strong. JCK, booth, the I and a sure job kind We is an that. towards which JCK trade representatives there As for and very presence us, strong. team brand, and that are was had changed position incredible getting my kind sales and aisle, we us main in show for tell

a a our lot product there. of product on lab energy to listened is happening. certainly are the brand is We There's We it and ground lab and Forever industry. for also us the on diamonds, lot the that be move focused transformations a diamonds the traction. going gaining One and also There's lot growers, very that's within grown moissanite chain category is some of the strong and grown consolidation to occurring supply space, for of changes that a certainly

of as far building as is So like in jewelry as an industry of Colvard choice, Charles ourselves that making brand to leader that incredible and destination. & believe that awareness building we'd kind and global strides

allude build did to ahead to that. just we and the go destination. fact you how Our is that to said really going goal I within are as also, do

and going showroom we're facility, lot our existing or further store. of brick-and-mortar a announce capacity signature streaming of further out to within these did awareness choice. building our also just We that out a bolstering So brand build we're building is capabilities that

what kind that us does choice. for further a of to the that. about mean, little talk the look brand to So of future And of bit

kind first retail a building So bringing of something right Colvard kind be and here our will that is stores we're case signature that existing of about the test out one with forward facility. within Charles and talking & operations

another overall growth, to to for another way of kind choice, the talk way room brand another consumer. of build that to So

of various jewels sold more it's little past Great stones this in the was components Is as being are a But in are place versus lower on people those that in and kind predominantly up $X sale brands, like going competing other landing? moissanite. small of terms quality in and that finishers where kind overseas? assuming loose to of years your now place where US million. gems that over are SE Or the typically XXX% direct just to same are the is the this I'm -- to listing market? moissanite crafts those

so just Yes, talk about let's it.

loose offer jewels we at So do charlesandcolvard.com.

can one that's So it consumer get and that place a shops.

distribution sell independence. throughout the actually those retailers jewelry jewelry and However, the put only partners We makes stones go their throughout leading independent distribution the all and partners into who our who then product way large One partners, our our utilize gemstones them that sell distribution our of market. into Forever nation's kind

be & far grades which the destination lower lower direct Colvard in that's goods as is they a As moissaniteoutlet.com. are and call basically purchased we grades. those can where those We from category, legacy moissaniteoutlet.com And through built Charles purchased.

go Blum Our next question comes from Private with Please Investor. Jeremy ahead.

Don, strong. like any Clint, your plan mergers, buybacks, capital have you and looking sheet just at do that. initiatives, balance I was growth quite Hi, Dividends, wondering look forward. anything going

fund I going great is Hey, continue mean strong; wherever strategic to our Jeremy, our cash growing to land. so question. they certainly position initiatives we're

of right it's diamonds, both capital of brands us for there's first kind bringing tremendous looking market we're all, organic in two growth needed. to the deploying So at between that where us and we're moissanite product now,

mind, the to from And that strong we're at the buybacks to things lot PPP to we for to everything, to with to it alliances, comment looking potential that prohibited buybacks believe there's that's just decision grow. strategic were fence grow or basically, that, that of room for acquisition, relates of So it really a of consideration. a got But or got different right? the that, precluded So, do kind we're of, and from to brand would take stock and catalyst it's to on that's kind ways But of going on as my more past we'll loan that, always this that's certainly to been want to or we've another as sides like be that grow that going just care this brand, we've speak lives of and not, of can't taken a we capital that lot kind our so now kind relates level. always to and look to to time. we're look to deploy to there, looking certainly a do; growth continue of look

kind the did forth shelf. did there $XX responsibly shelf, we a push put shelf we of So at million

say So we've have credit we in in lot And do million a that with we to be facility the be would with $X that's which we'll acquisition, cash have and place, got the credit of unless through line remains were able to for comes somebody totally use, an I talk $XX.X opportunity that solid. seen. I up million instruments certainly wouldn't an cash. a to

But don't know there. how I can talk kind that's much So be through, I Jeremy. transparent as as of I could

This like turn back any the conference concludes would session. remarks. for to I our question-and-answer closing

our and for Certainly appreciate at to the support the online. Again, CTHR. all IR continued Charles events reports and thank our call everybody forward earnings in we to interest Charles news for today. you coming our and any and Okay, through & forward your next there. Look charlesandcolvard.com. I & We for great. are calls what's come to want look next We coming any appreciate Colvard. all publications On of Colvard, behalf and

now attending Thank The today's you concluded. conference has presentation. for

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