Charles & Colvard (CTHR) 7 Nov 212022 Q1 Earnings call transcript

Good day and welcome to the Charles & Colvard’s Q1 Fiscal Year 2022 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [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 are among, other things, the company’s business strategy and growth strategy. statements is only made. forward-looking date of identify statement the which may as speak the Expressions number uncertainties, These on predicted and a our statements or company’s risks forward-looking are beyond expectations, are based quantified and subject our cannot of which some on are largely of be and control. to by actual forward-looking statements. the results and from developments underlying differ materially those or set Future could forth in contemplated be information accurate. can In light be there will of prove the that uncertainties, to these no forward-looking risks assurance and This not of purchase proxy meeting designation does shareholders. earnings securities, consent, any to company’s respect agent to call offer an constitute or nor a a solicitation the with of authorization Accompany is at company’s accompanying slide website call the PowerPoint of supporting deck, available the – ir.charlesandcolvard.com/events. which is Investor today’s a on Relations’ section the be a prepared company of session at The Q&A remarks. conclusion hosting will have ir@charlesandcolvard.com. Should please like you’d you submit, to email questions recorded. event this is note, Please being Chief President I would Don to now O’Connell, like over to Executive Officer. conference the and turn ahead. go Please

Good XXXX report Welcome, that delivered everyone. going double-digit Colvard’s another traditional with sales both and quarter segments. I’m growth the our to results. first channel online you company in of to share & Charles net excited in afternoon. Today we’re fiscal

both as finished loose well lines. and in As product gemstone jewelry

from compared is quarter for share. to were sales XX% $X.XX strong XX% for earnings a income the $XXX,XXX or ago the was Our operations net in quarter. delivered QX we the had per increase $XX.X for a year’s million, quarter over which XX% We year $XXX,XXX of Income net quarter. the gross for and prior margin

working capital at QX end million. our remained remained and strong $XX.X cash Our the million of at at robust $XX.X

proactively from a for accordingly we’re and with improvements supply our managed see in I’ll positioned our in initiatives to addition ourselves dive order our anticipated be have to critical in say I’m experiencing, well have numbers, constraints the season. for potential us QX many standpoint. product the vendors, the key demand. to planned strategic are that was of holiday In we Despite operational holiday we the call. industries necessary to our positioning proud to the execution inventory that chain significant to disruptions our satisfy continuing in period an later our year-over-year

like For over to discuss our I’d to turn now, Clint Pete, call numbers. to the the CFO

summary Thanks, Don. provide XXXX. Today, September financials the I ended will first key a quarter for of XXth,

to quarter, can Please file Form-XXQ, detail in our to found earnings unless we this expect all which be that issued note, otherwise. Additional tomorrow. our afternoon. specified ago And the we year comparisons are that release percentage from

X%. is quarter. jewelry with International increased demand revenue. of direct-to-consumer increase retail an $XX.X our for which online We with sales for XX% XX%. for for net million the customers strong demand drop-ship website, net million transactional XX%. of XX% representing our sales channels segment gearing XX%, of retail from from continue retail increase due net domestic sales. our traditional premium distributors and holidays, sales or will the of XX% Loose up Net segment increase quarter XXXX domestic for our million This which net quarter, jewel’s or start charlesandcolvard.com strong in totaled our to QX for due QX of In by quarter or totaled for pure-play the outlets brick-and-mortar our we an $X.X total our sales well as sales the to of Finished sales jewelry The representing increased customers. brick-and-mortar as total XX%, was sales. and other versus moissaniteoutlet.com, the $X.X $X.X net increase as wholesale consist the distributors. for from see Net our customers. an online to totaled retail and channels increased sales XX% total, increased demand includes charlesandcolvard.com, increased Net net marketplaces, for million XXXX our

gross versus are a Signature discounted delivered the channels continued the XX% we orders quarter, higher on, quarter, strong Moving XX% in online Collection margin carry a not which of in margin and segment. due increased which in our year and growth to strong ago

at and ago and Jewelry with for attendance the our season, period. all XXXX, stock-based an are income quarter. We in income expenses to investment is $XXX,XXX. per XX% the within net QX in reported per XXXX operating Included total upcoming performance, due results tax XX% holiday increased increased share $X.X associated income our the to or operating in Trade expense primarily $XXX,XXX QX million representing compared for the ago our $XXX,XXX total increased strategies quarter. Show, net Las quarter. XX% compared increase in compensation G&A in $X.XX year year and expenses to million, of for $X.X share, These the JCK For with increases XX% diluted $X.XX sales diluted or of XX% preparation Vegas bonuses of spent expenses net increased and the marketing to Sales marketing

tax allowance in forward XXXX. QX as reported deferred we as income now, our expense previously recording are We reduced going tax valuation

our expense our required position. cash net operating taxes or in not we income an outlay due income Although be statement, loss to will any to carryforward

compared period. million the share approximately increase option XXth, XXth, exercises XX.X weighted our September used of for shares stock average September increase million diluted and XX.X in outstanding calculation per average shares by an shares was the in by weighted quarter in shares Our to XXXX, XXXX. at during at restricted were The insiders driven earnings the outstanding divested

snapshot the sheet. Now, let’s move balance to of our on

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

season. $XXX,XXX holiday quarter upcoming flow Our inventory investment The of jewelry quarter, during to the operations primarily the cash due for million used was the in cash in building ago preparation year used quarter. the $X.X was compared in and finished the to

million of XXXX. XXth our June $XX.X capital working with XXth, at capital consistent was of September Our working

of million have our Chase $X we In JPMorgan to access sources secured terms liquidity, other facility credit cash with Bank. of

summary, value. that, through our million I’ll As to of preparation and our $XX.X jewels XXXX. as today, million remain for Loose XXXX. compared June in and turn was XXth, XXth, growing million $XX.X as June shareholder as to and in credit the call to of accessed XXth, Inventory upcoming continued jewelry to demand requirements, XXXX, September million our levels $XX.X With of holiday to not the totaled facility. funds was XXth, season. financial In the have XXXX Don. strength compared million Finished confident increase June of $XX.X XXXX over inventory we compared for $XX.X $XX.X maintain of September as back XXth, through efforts million we to stock

to our Clint. initiatives business, responsibly These while for our XXXX. strategic underscore positive on commitment executing Thanks, results fiscal managing our

QX & During in Charles Colvard our product XXXX, Show. Moissanite of elevating One industry-leading in FY authority ourselves we provider a as the Jewelry participation brand our premier Moissanite and our an Distinguishing and brand Vegas Forever JCK expanded presence by house brand further to Las Gems.

editors the grand JCK Wholesale strategic of pieces, the expanding event Additionally, opening Forever We our importance Collections. Charles forward Fashion Lab gave innovative press underscores partners new our an on Jewelry, Diamond Diamonds our to available Diamonds, We brand preview upcoming Center as This Moissanite the Lab these to flexible Jewelry, bracelets Grown Medallion season. with exclusive intimate Diamond rings well. Panyu, internationally. Grown in our City Moissanite choices Lab customers. recently and flexible Fine product introducing and of One available New bringing other in leaders and launching York focused and China tennis offerings, hosted of which our Grown holiday our product and Grown Distribution collection recent a new our and some at Zodiac new Fashion in support review Fashion nurturing industry & worked presence all fashion include petite both Lab and broaden Colvard Including in of and Caydia some products. We of in influencers necklaces

broaden strong source of a space, these we not product comprised to precious Fine Colvard featured Diamonds Jewelry from recycled we our as believe Fashion to assortment, gemstones Made; business ourselves seek mined in Bridal competitor Jewelry. diversification a remain While the rooted position Charles Grown premium as as assortment we XXX% Grown with a continue metals. Lab Diamond in We nearly position broader our premium of & in Lab

personalize to to we Evidence the and strategy, ready streaming but shoppers. with customers. customers As expand continue consultations experience. scaling we in on that event shows consultation holiday, services majority that to that shopping video plan live online, the their delivering gain our be of remain virtual seek enhance mind, streaming continues do for experience XX% With to also focused consumers and omnichannel and an for of shopping our we’re traction and planning exclusive shopping at holiday our online to buying optimal personal

experience, Fine products break on the that customers we Jewelry us In touch want of can buy. addition our believe to to customers before feel firsthand. Signature so products that experience led first and retail the ground This they location Showroom brilliance digital our to

in spend will shareholder we Jewelry critical seek these initiatives reach continued With audiences. response and this for that We believe to and deployed $XXX that predicting drive turn strategic that reach execution your awareness value. are build demand. consumer Fine well holiday over I’d movement. We we Lab operator quarter the top growth the to to This billion broader brand and believe to we influencer sales back to digital successful like more to in to are it capital recognition questions. lines believe the this over is global ad open e-commerce positioned line deliver achieving in resources Grown we Experts and and campaigns marketing the of will that,

question-and-answer the Matt with first We will ROTH now comes Instructions] from Koranda Capital. begin [Operator Our session. question

may go ahead. You

for Hi, the taking guys. Thanks questions.

I performance specifically you I but just they and Finished if maybe Moissanite category were the similar quarter? Grown or average guess Lab how qualitatively of off, for versus you see to typically growth the could call Jewelry. or to out the from could quantify, and it of And cover those trended between First product I lines don’t of know growth corporate two you they product sort differed sort speak wanted

Yeah, hi Matt. Thanks Appreciate that.

don’t again, break the product at So all. we out percentages

accretive business. Diamond Lab Grown and additive we the experiencing in So, growth are

into of also featuring product and of significantly kind know, to business We of we to that’s that too holiday. heading start are that why lift as of percentage that and are be part pleased out that. Matt us lot categories That’s those around seeing, we’ve that’s quite we business conversation. Moissanite here kind you What why increasing the as a Moissanite overall our is advertising well our more with very events been expanding you’ll business, see

Grown Lab Diamond $X been in quarter-over-quarter now that kind million that it I’ve coverage talking certainly know, the know, in with the the revenue it’s quarter. about the for and be the getting the, You you lifting business, to in we’re us for that conversation, overall Caydia additional of category, for actually with hence now,

So, I can I but evasive but know that’s I it’s question. appreciate basically as you the now, right much there, as give

that’s try. fair Yeah, a enough,

to how holiday, latest I for pretty steadily positioning mean, looks during inventory are the the guys thoughts on just built So, feeling. you wanted get like quarter. on your it this

of to holiday plenty channels. your in sort like wondered environment, expectations know promotionality for the you’re general the season. positioned online with comment into you like looks inventory looks But how it just thing of the and level here? could traditional the of if both into holiday inventory season on and sell What you So

to from sales short, good you that of side push actually on the started, could in hindrances for is as and to revenue make was it, did even on going kind an opening deliver sure spend for have spend, the an could, as bit that as that of to that a anticipation this believe we season. our perspective, additional where in domestic it that earlier know, so the in we us international or our we marketing and Christmas of look far as And to OpEx kind a we we inventory then you The supply we July, spend, increase prep to earlier don’t year. have, anticipating got call so the holiday dependencies we we’re wanted started answer be an chain, started constraints spend we holiday it, holiday from much we really we you’ll know season and really, though the equation, little position we in

begins essentially holiday believe we So now.

Fortunately, able we’ve core achieve highest for margin, is to the significantly we’re XX% us, you which experienced XXXX. margin know, this since that in

the pleased And be lower strong You can an that very, overall elevate growing overall that helps fact we’re certainly us know, certainly it of with that, portion that. maybe pleased we’re But was remains our with to business. our Clint our as correctly and very even margin. Collection than Signature

we I to So with some sales we’re season, said, holiday is being going get and still that into going believe now incredibly that our to market, to be going and you we’re which there remain know, for that blend, with you strong for holiday. holiday. into going But head and the to, cadence to we’re in mean, the will, basically we’re going margin competitive start be

you would that improved sense. questions look dilutive typically, And a be mentioned toward that note, more Since typically your did gross to when Okay, around quarter-over-quarter ask mix you I margins skews makes super margins, of that. year-over-year. I the will Yeah, I margins, yet channel, and strong. couple traditional and guess

benefit full a was in from strong, just you call trends other exceptionally of the couple mix, a sales quarter? drove maybe performance So that of gross product strong was big price exceptionally just that kind out like margin pricing can there

on we category. so side, Yeah, in experienced know margins online nice very that high the we that

leave we’ll that now. for So

and becoming to negotiating because putting And with position bringing On the we’re at side factories. we’re the volume a traditional is goods we’re efficient, ourselves negotiate. a more equation, price, in factor market the to better increasing better we’re able getting our a strategically we’re certainly more to be of more of and

margins. know, starting That’s partners business well. their know, nice in becoming we’re this as wholesale a and know, benefit critical saw as you business how little this they to do the the you what quarter, Also, more helps, our of bit and be distribution early side you very we we holiday too on demand how for in they that positioned year, to the we the too well. totally saw, and operate. So particular And had we do in efficient of more really Moissanite

in So to to they’re as and starting well. really a able earlier position to holiday they be on be want capitalize

So One growing is is our distribution side. business of quite on fronts, partners. all doing Moissanite our that Forever for well their And including all

Okay, you costs give know great a of whatnot. year-over-year marketing sales basis margins here. And in I’ll bit back XXX I last on and then spend. in color anything terms But and this in environment a the out to sort know, maybe on brand one ad us out ROAs qualitatively year marketing, I to if at spend from know the from we’re de-levered quarter, IDFA in and versus marketing, the then And any the just different queue on points you then sort could could marketing quarter more of break just little very your and in of kind changes? jump hear. But efficiencies me, just guess you performance and just call impact last in you could, you Apple versus just performance that on of share the least about

Sure.

is to we do about quarter-over-quarter achieve campaigns category going funnel, try as you as to to want break on Brand top test the capital mid been where lower pushed capital to some had towards strict what holiday other based out ROAs opportunity have, that ROAs we’re when to to we’ve deployment in be Moissanite the we’ve focus we I’ve well it’s capital speaking primarily far able lower and of as of that a profitable be mid out is. it of not Outlet be over some been see into the target we’ve and redeploy to shopping. too that we’ve I’m quarter-over-quarter, conversion funnel, funnel, that season know, very you But break to to we into that don’t as know, So, we also run heading certainly, of our to top and done consumer we able of the able more sure kind funnel, to make that

So of we’re that. benefit the to starting see

And we deploy wants. of and kind envelope test that that we time But for holiday what working and know the proportion closer is we look business. But we’ll on it’s nice line revenue, funnel now you towards see, to believe line build to the look to been, we’ve advertising. tight additional constantly it’s beneficial to starting to the top sure top start vigilant that into top closer get into business. as we’ll and in to We’re do And continue to making effectively of consumer capital growth as certainly, that you that and again, that is ROAs know, Christmas. and the

this So, did kind plus this starlight factor that. the, we’ll comfortable Clint and we’re of you overall, to, our New that we’re like like the a expenses very in York we campaigns, event some with more we know, know, But between an anomaly more doing in things alluded did do that and you spend the of City have profitability quarter spend quarter.

of So types global able actually that And great. on overall want build money that and brand the be the awareness. brand cost that into to we see sales doing to marketing those are brand we initiatives we’re that that

Okay, great. Appreciate answers, and queue Don back here. I’ll in the jump all

Instructions] from [Operator next Investor. Our Johnson, question comes Paul Private

You go may ahead.

results. the afternoon, congrats on Good Yes. great

Just a couple of questions.

the forward what size all, operating loss is carry at this roughly? of of First the point net

ahead Yeah, you take and to sure. want Clint, that? go

about at it’s stage. this million $XX roughly, Yeah,

that state and look in the – what therein. about filed that’s But and If we our state see else. federal you both value our – the all when you Q, the can the

Okay.

about to center why Secondly you terms more in for point in this the sort China, tell us choose best at of China with the distribution location? as regard can us hub to of

of kind made Yeah, that people, since the have of announcement. you so lot a know, asking we you question know, been

our earlier really little Since China, than you get, a know, to was know, had started we a Asia-Pac point that is, strong to So by got United COVID, business the distribution suffering. we’ve business bit where there. States, impacted a with very partners reality you particular always

that well. business make had brand brand the our Colvard on from And and make was brand to well. market, from other big that you originally. there where going China too our into we to promote distribution they counterfeiting Chinese that that does the and we between you So amount as sure we it market to sure an of China, headwinds partners, build significant the as strength has that have actually some international and China is that perspective, right the back market we international wanted & back our China well go China. bring into that Charles tremendous actually hedge know to a want too does proliferation names is And as Moissanite understanding authentic know can get as can in support to ability And products consumer there and can the and of

as we if and we very there. the is So it strong more the makes that already have feel Charles Colvard of partners, wanted sense partner question Charles you any managing – & Colvard focused more and strategic know a This with and branded look

– chosen center a sense, are for out one I why mean that distribution have ton of although that just ton Moissanite coming China? a Europe of mean. of for I’m there but of example wouldn’t and understand I a in instead cheap makes you area. sense, yeah I wondering knock there’s offs

centers Yeah, you for universe. these want know & look forward-looking look of I to Charles to so the throughout comments, don’t to types Colvard give but

and market and long just is, we’re longstanding us Chinese And only a the now. really know it’s us the and to the a partnership use you And strong. District, with able it’s awareness presence allowing really utilize with our was which has to want be the to for really, right been in And The that right partner Asia difference to just be is Panyu there. convey given major time. we Asia-Pac Jewelry trademark that specific brand signage a partner for throughout there. actually

only true are to we right to ability and that is, can basically, single wholesaler usual. cost low multiple what retailer manufacturer Charles us. stones validate it’ll they & allow difference are. And and just as very gemstones are and there. communication to The business stones, and control pick these brand They are was that authentic. there. So Colvard manage go that They and it’s particular jewelry The for and the there know our entry

all Earth, Makes I’m strategies see saw minute and IPO recent differences take the tell Brilliant can you you theirs? sense. you sure a essential your of the us between guys to just how

Yeah.

Brilliant it of we’re first pleased have all, very to as what coming the into allows Earth further validates by out, us doing a comp we’re the Also So market. it company. a

was, You were at. the Charles determine the the know, kind very to & know and – of past you where issue valuation difficult the part it’s of or we in comp Colvard

that So, you know, comp to. pleased we’ve got certainly to someone we’re

a which from diamonds I naturally things not. and we think certainly all are of other But right business mined perspective, kind do between of Grown what a our we have we alignment They Lab focus. mined we do like and now. do lot synergies gemstones, and

actually, a very omnichannel consumer wants Fundamental are do aligned with the to And little It’s out our it the bit they’re that. But to to what focusing gives a overall, transact reach lot commerce, by we of ability we’re bit an stream, we’re now shoppable some Showrooms doing. And pleased believe also Signature to building strategy little know kind you to that us we’re our that them. a to We reach. with differences, broader on anywhere ability different. consumers’ look transact. of

just in value, hog there’s are a I Excellent. direction. address And nice ashamed directions fat on first in probably but an more among one jump shareholders for one exists, be money to might the not the you go time million you four people not the shareholder to add because board, that doing wild lot just stay incrementally see $XX and it path perhaps lot acquisition. what assurance instead current been really or a distribution then headed on you great, that may concern to ongoing I’ll you acquisition you’re to queue. cash think in is been and with worldwide back in that just since centers the question going that, money to crazy different Can love sheet spent going seen have be it issue and came whatever give so. a a spend Can on on an if some would balance a be, we’d of some do on is guys perhaps of we’ve you that past, spending We’ve long without a

so that Yeah, way parts. of I’ll a on the comment try to is few

look So the at when strong can number community We CEO I a value to that world the this a my world. QX acquisition as we build role, Berkshire business. It all the tell take build the alone. presents one come for I look that build year, grows really, did nice that transitioned we’ll continue my through the not perspective, don’t, know, will you as way it opportunity opportunities. effect, you in investor value the the that’s organic that from an pedigree internal you capital, that know, lightly. also into stakeholders, you growth. But is We do will and stand really for unless if and look itself And is, Hathaway goal past, build anybody wealth built business is the else, stabilize really I well that through build a from But shareholder myself delude value. for there matter, fashion, only did or four throughout not in external to cash, quarters I’m to to we Certainly was that. my looking for the I

is, right someone the a really, to something do if out, aligned Showroom incredible got initiatives believe build we value, to initiatives commerce, kind have strategic good studio out our we’re on. those really between the with what stores. now, we We’ve build in or So we shoppable organic that’s place. that look of the we’ll that But there’s take for long-term Signature

got I growth, where now than just know, anything how where for of centers, first want we’re organic that. you one the room certainly going. plenty there’s China. is don’t and we’ve Now further And we’re distribution to But, going discuss in

I appreciate you that. all that color. Thank for

last questions. with We [Operator Our Direct. from will I-Bankers follow-up moment thing any now a comes take question for next Instructions] Patrick Metcalf or

ahead. go may You

quick going can you Don. see XX% holiday growing are afternoon, to look doing anything Good the continue that to you the assume Lab supply I anything you into very ask you wanted Great this you quarter. I inventory year-over-year, with question. did that. planning like of into a going corner I supply guys corner there Are you are forward? you season, the quarter. the the going Is well to Diamonds? guys Grown

how So, Pat, are doing? Hey, certainly a loaded you question.

incredible that, Moissanite we chain, to Moissanite certainly like primed. Forever have I what in be the very on constantly we’re that on be constantly incredible share related everything is supply, One front as an to know, looking we’re and secure can that. supply, we’re as tell market possible – to You you And have prime an looking position. in constantly the vertical we’re looking to supply we And

make we Lab can what that absolutely goal was that with the valued market. the bring consumer On are to there, certain drive case shopping had state. believe to a that that We the We there there. business To future things now that control consumer on spots in is sweet there business was to out certain was that build Grown us, and to consumer that Caydia front consumer the there sure believe corner we and Diamond the Lab Grown Diamonds, forward.

decades and elaborate than I become so that. and our Colvard So as But that diamond create what bring the vertical. significant the to more & in kind of state want kind don’t be I utilize as us more the future matter to continue we Charles to to vertical have world a the would subject to really overall of three business ways become resources, market we over goal look really to share, build can as the utilize in represents. the that advantage expertise jewelry of possible, and prime

Okay, and work great. Thank Keep up the good another quarter. great I expect you.

Thanks.

with comes next question from ROTH Capital. Matt Our Koranda

may You ahead. go

Thanks follow-ups. guys. for the Hey,

on showroom and that’ll mentioned breaking be you since HQ. ground Just Chevron, the the attached

could are sort at that you folks sort to out think of well, sort then benchmarking get over around could helpful. take We your brushstrokes if around how it’ll some one be showroom on tell guys about metrics So expectations just just when for be of a sort did industry for see existing locations helpful. folks of you And wanted on to lay Just guys? that few which time? And of you provide I then we potentially to cannibalize online sales existing would more maybe thing kind setting completed. for about of as to just sort expect think it. sales any is around that be how And that, head locations showroom curious of potential just you could broader showrooms address wouldn’t or there? you why more level

all very, so good very pointed questions. and Yeah,

talk setting let’s let’s I’ve quick, that little the store? cetera? York, and not know, I little Why I So about are can your you talk if just real So in that. that somewhere bit et up in Morrisville if about had your first location a calls putting lately, as lot New LA, a location existing why are that you can, investors’ address in bit a location of you

that we allows companies have able to purchase the at, infrastructure. it’s to, will every up Mecca customers Raleigh where existing from It us easier in our to what corporate Morrisville, of to these turn our and for get away. Center consumers the in be build shop types North we them that will we’re one, are walk-up literally the that it’s alliances big So us to to products day of and well. number it open And Carolina us out, as kind we actual facilities, build also and all for within single that allows and shopping, the to do case

there’s around And very do to entities with buy, So we large holiday that. very, all things us. where can get them have discounts they could they strategic like programs different

our showrooms when feel the anticipated To people showroom we we’re touch fiscal that be want that as operating, they’ll the be showrooms giving jewelry. there. now virtual, right particular part Signature kind ability your that’s place and So not about our what regular to be open I a these and And kind we information, but giving year. of going the answer within of feel Showrooms to learnings that get look we way the retail great case, that is to part end showrooms you consumer build the the out to know strategy, and they’ll at omnichannel the boutique of support these question

to their business points for data have ship. and showrooms these forward able be Also showrooms to that live to we our these we to that planning in of we’re in pack the products pick, distribution be. be where these taking Colvard where that the try in Also, products. think particular could shopping could also the inclusive potential demographics And showrooms about to particular consumers inventory could center. & consumer Charles support up able be also that pick could for from the where We’re

that is each from consumer world, and potentially an locations, chain to kind we’ll them. wherever of supply I these service own look design get one also can or any their for And come of to world, us. maximize So pieces it and or of operational efficiencies go look kind

a of for have there’s of business. to in be believe a last Signature tremendous ring one And environment. type Designer this know, there these or us overall size need growth thing, lot Showrooms. And actually we ease You will it’ll something, the

stores, it’ll be at have In our different our it’ll have literally we be pinnacle Charles where striving different as & will things be online products our of growth. That’s captivate we’re that’s we spectrums. my showrooms. So a a there’ll lot items these the and opinion look and Showrooms, a drive lot you across whole, traditional, be that Colvard audience There’ll that purchased kind multiple product be to. categories segments, of in business all exclusive – in Signature of if our can

Okay, the sequentially a strategy noticed showroom cost that was open and And you. showroom QX on sort showroom then typical more helpful, ticked detailed be bit quarter, up Thank Don. to for just capital of front the basis? go-forward should about was any CapEx on one thinking there the spend this was how very a just I in a and little

know, know allocations provisions negotiate last in we state make our future Yeah, did end spoke to the year of you so that leasehold know, quarter did you our our fortunately, some our where we we and leasehold you in in we improvements.

handle side know from POS improving well. we’re best And in constantly constantly So, other be continue wherever Showrooms. as know are and do able internal was to machinery we Also, small But know management management the you world out. our we we business there and you that’ll that, that’ll we’ll continue to know systems pack and the support spend to inclusive getting on certain like breed as investments be some warehouse for we to of you there. the subsidy what trying to equipment warehouse know, and and there systems, wanting in to of And grow CapEx that, that and to we’re need be business. were things the software we’re computer as you pick, ship Signature grow this CapEx to build ERP you our system

which then Okay, for earlier. me just I may have great. one well, housekeeping And as one missed

You may what but the balance cash of large the was driver in quarter? it, the restricted referenced have already

you go to take that? Clint, want and ahead

facility. we’re our related Yeah, Chase you all was – That you all fully doing? to Hey, see Q it’s that all JPMorgan the our how K, Matt, – disclosed to securitized to in but in sure. are the that cash going Yeah. release that’s our related credit to

set secure we our to So we facility. just $X aside plus all million them $X assets, basically, with deposit that credit of instead a million encumbering

very it it leave there. guys. I’ll clear. got Thanks, Okay,

Yeah.

Matt. Thanks,

This any remarks. Don to closing concludes turn conference over our question-and-answer for O’Connell session. like the I’d to back

that. Thanks, appreciate

your families So We entire season. of & your and today time here you and Colvard. a the behalf team healthy on at we wish happy holiday appreciate Charles

Be our in Looking forward to coming call the next well. quarter.

one for a of view from conference, now. conference digital call XXXXXXXXXXX, this may or archived website be will The replay you XXXXXXXXXXX dial, access on hour company’s To beginning wwwcharlesandcolvard.com/investor-relations/events. at the approximately the

enter joining. and when name Please attending company You XXXXXXXX. record your which number today’s for you concluded. presentation. will will Thank be be conference prompted a to The conference now is

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