Crown Crafts (CRWS) 9 Jun 212021 Q4 Earnings call transcript

Welcome to the Crown Crafts, Inc Fourth Quarter Fiscal Year 2021 Conference Call.

Your host for today's call is Randall Chestnut, Chairman and CEO [Operator Instructions]. Any reproduction of this call in whole or in part, is not permitted without prior written authorization from Crown Crafts, Inc. And as a reminder, this conference is being recorded today, June 9, 2021. At this time, I would now like to turn the call over to Craig Demarest, Vice President and CFO, who will begin. ahead. go Please

Executive Welcome this for Cole. XXXX. Crown investor A company's Crafts available me & Also, Elliott, Thank Operating through Central Chief Daylight be fourth Time to quarter call Officer. call Chief the Chestnut, will the are after replay fiscal XX and hour and call p.m. one conference for replay Olivia today President the of you, end telephone Randall the the Officer full September With can X:XX by X. a and be available of web of the at be call our visiting days on www.crowncrafts.com. will accessed year website

in I remind now same like to That Randall. begin, made cautionary language listeners applies we to language call today's the would will press statements I the conference call. comments release. the Before to contained over in turn of regarding forward-looking

you little will a And comments good from very comments, and Olivia morning few Craig, this and a there. housekeeping it everyone. make Craig and different I'll bit and to much few thank a take general doing we're time.

of in the diluted was turn full Designs to our make a best decade. and of back call, the first with for earnings excluding Also Olivia, on this us Olivia and Operating operations. has I'd Craig few Chief over with like after and a is January I'll President February on the promoted First the he's per impact many years the of been been year, to us Demarest President company. to because Officer in time company joined and CFO. all, welcome it team. years, FYXX to report in share Vice closure the He conference Craig a as the who over was Carousel is XX remarks then with I'll to

the Carousel We for were in will full year FYXX. excluding sales call. the both approximately fourth later discuss quarter portion XX% Net the an Carousel

direct that that Olivia results. been of we the May Carousel will who closure disclosure. us as the unfortunately, of becomes when know reported impact our deals. we in moved With years discuss of effective we third we warehouse of to was This proud helped of our of own for It's And number shareholders By for earlier make those. From adjust to announced able us will great of many street and year past our most FYXX known many our operating tremendously the operating As competitors to has one center, and calls, a and disappointment necessary. of of you consumers we during year with distribution any have you. the as commonly models to were it earlier had large regret turn Designs discussed ago, was customers. of a the great ship continue stores. operations during Olivia, decisions that, I'll our to tough XXst. the drop a to the party with over closure and and we're Craig years, lot pandemic the this it and

very sales Randall, million and turn into you, million quarter XXXX full out $X.X of go year. fourth An in fiscal call going were on touching detail. $XX.X with prior million, lot X.X%. to the I'll a net Thank the Craig to over more compared $XX.X at results Fourth everyone. start good or quarter increase the I'm and by to a year level. morning, high Then

announced May an very increase XX, close or of Carousel decision year million On difficult the For net prior the full compared we've fiscal to million X.X%. made sales were in that the we Designs. $XX.X $XX.X XXXX, million, with $X.X year,

lived $X.XX $X.X compared million, fourth net income $X.XX assets year share pretax per a million net diluted and quarter after recorded company quarter $X.X $X.X or compared diluted fourth was the after charge year tax, diluted diluted year, share, $X.XX been $X.X for Carousel's income million, fiscal which million, in with closure, current the million, you long- $X.XX that or in the tax if prior impairment per XXXX the share, $X.X exclude would on per the with have per or with or Associated share. would million $X.X been charge have

$X in the almost balance was our our Program and On end, fiscal At Protection we it line revolving and classified of our of on current. cash and side, borrowings $XXX,XXX the year Paycheck loan no year balance sheet finished million, with credit. included sheet

of However, SBA X, that had the will XXXX. subsequent cash June on Directors announced XX, May the the business fully company's to On we company's had they of close our declared year end, common July XXXX by of share that dividend on per that XX, $X.XX on be as we forgiven Board record stockholders the were stock of paid loan. notified to

earlier, year lot XXXX to mentioned a turn very to for fiscal Randall call make detail. up go operate the now during the able employees of us. year pandemic. to to of play that continue the into who to sure And good proud COVID-XX very we're over to were stepped As I'll Craig more a And our was all we

highlights. only Olivia. Thanks, financial going to I'm give

with the detailed please refer analysis, morning. SEC the XX-K this more filed For company's to

of $XX.X million $XX.X net year, an $X.X with were As of or for million, quarter for X.X%. fourth increase million noted, the Olivia fiscal fourth the quarter compared prior the sales XXXX

prior share related in of year current The by the related the for year and discrete 'XX The primarily quarter, prior penalties is prior expenses an by Gross year. to administrative $XXX,XXX the year fourth partially the reversal combined $X.XX that year from Carousel that $X.X result XXXX Net of from impacted $XXX,XXX product The impacted had the to of by million sales had by income customer of to of or for the XX.X% period the higher or the Marketing $XXX,XXX full offset in of XXXX expenses services to $X.XX The turn year compared of lower from fiscal that diluted for of of the and the the to of respectively, reserves million For previously and favorably was in net decreased current Designs. liabilities, tax primarily sales COVID-XX million, overall to due amount sell-through $XXX,XXX provision tax due increased share, year. the increased for the share of sales related current the particularly credits and pandemic, of impairment by a over and net sales, the for tax in by current current higher net compensation costs quarter. resulted for of net effective diluted retailers, to portion quarter current of $XXX,XXX. provision $X.X in XX.X% reserves net of income tax year offset $XXX,XXX fiscal current income entire quarter and for current items income same prior mentioned for sales net full from travel the respectively. outside the $XXX,XXX was a $XX.X net impairment and one the liabilities, sales after sales but been year diluted of share, for X.X%. $X.XX of Profit was loss, for current Randall. decreased an at XX.X% net and been as share quarter upon compared quarter Included net with per of quarter tax credits current year. were recorded. per $XXX,XXX. based $X.XX portion for current gross income by million interest and period. rate $XXX,XXX to share, and a $X.XX increased share. diluted XX.X% by primarily the year. million year income and from quarter year but The per well of and the for sales penalties The of income net per for or were the is The or due and current which or and of continuing quarter on XX.X% in year mix. XX.X% unrecognized taxes certain the favorably remained $X.XX Gross throughout fiscal $X.X in as previously impacted impacted declines $X.XX The in favorably operations year year increase assets customer for to higher $XX.X share long-lived impacted year net the that, by profit effective recognition that rate the the diluted for the year March and in of operations million of increased taxes fiscal $XXX,XXX, favorably of certain a previously is impacted by million XX.X% were year of fiscal per at current the closed increase annual was and to the for The XX% reversal net ended overall by increase year, the XX, major fourth current for quarter and impacted has XX.X% million tax back in favorably $X.X for diluted prior effect administrative expenses increase increased unrecognized customers million from for continuing were $XX,XXX in with prior recorded. year, per the compared an the tax interest net prior year. the XXXX. call XX.X% income in increase more $X.XX to diluted favorably or due to prior per favorable sales is quarter over per which both the was profit the $X.X is is sales sales partially year increased prior share, $X.X $X.XX to With by prior year by The XXXX. of Marketing the XX% I'll $X.X $X.X year million and the tax $X.X million per Net XXXX the

much. Okay, you anyone you very on Craig, line And have. up any open thank it that questions up and I'll ask come to Cole, may the back

Bolton Instructions] Weiser [Operator we'll Linda Today Davidson. from D.A. with come

on roles. new the their to Hi, you? new are everybody And how CFO. to welcome congratulations Hi,

can Designs? impression under what just bit? business asking Is business? that an So was I me, Carousel you Can was correct? start e-commerce Can little that that about remind you describe I out just a was the by that

and the United website sales, own its e-commerce And the diminishing et with whole and that closure. business. that websites. was the point Douglasville, prominent time Yes, very and was the websites, not Linda, made in it the some move cetera, that remained was through through to owned But States and prosperous very got that with it pandemic, on goods all sold we Georgia, it we decision in an and anymore. the to the just it we And made realized forward that Yes. e-commerce. company tough other knew

e-commerce I'm assume pandemic the I thrived. thing have the confused so that is talked businesses I e-commerce. about to Okay, you've drop ordered to the And have I directly during even talked about generally about you've advantages which your is just shipping -- customers think the through business. ship And

operating of was So or just the problems and Carousel explain just you're confused that? it that the is the you thriving separately I'm just had rest and from on that can about Carousel e-commerce

there's pandemic the NoJo this is about can talking I Linda, I which to it. and businesses well is referring mean, separate during business, so the explain Sassy all Yes, our important. the two I'm one done I keep one

sales therefore into Southern our Asia in to in do warehoused the made which USA, imported you And that pandemic, those point Okay. sensitive, give especially get cost way the and when that Unlike during coupled generate add with it's and Carousel price the moved drop off customers Carousel California discounts and advertising we to two ran the the Carousel higher. it onto was from to we unprofitable. pecking And were considerably made established Designs, price ship together have prices only in so higher made it everyday order to had there made substantial website on Designs to at when consumer. the were pay the that mostly it the we up of

Okay, now understand. I

will I'm kind my think forward to be be I we, do thinking model sales are your mean, channels more when those in lost like, up about Or through other should of sales going you sales? considered of distribution? made the So

get spreads to around I knows? it mean, take Okay. where all mean, like Linda. it's anything hard to is places say when about out we other you it's I Who it.

it. to we get around. a But going well, Yes. portion Okay, of it's spread

can't quantify. So I

Okay.

some a product, let product a end And, that sold what it's end And, import the this, the ticket in very a in simpler high high different say price. had twice me for sold product many of it was Linda, very cases items for.

you. got I Okay.

bottom So benefit be we should rest we that and -- your assume Or closing ongoing reflected in you'll think line -- your of would to in reinvest you from the are the the benefit business somehow take the results? business? that do

mean, Well, away again, looking we from possibly from Linda, those away shy I a much can, period. as question. a shy that's as forward And no; we we

you unfortunately, out on your own. got to So sort that

while. been has readers and it Okay. But unprofitable unprofitable, information the we has gave the for you and a been

historical put were offers release the we that closed put it. first out, we Carousel, we the with associated that when In did

that. what see any profitability for and And there was sales I did can Yes, the is way say you FYXX? so

what put Linda. -- release? press did the in on, we Hold With

put think we I range. a

put range. We a

pull it back me Let up.

the in Well, there. we put 'XX

previous put which year, million. the Yes, we previous net the last of was -- reported $X.X

$X.X million yes. XXXX, in

That's the full Linda. last year, reported

-- didn't down 'XX. we 'XX. we So Excuse break me, have

okay. further. Yes, assume it declined would I But

assumption. fair a probably That's

All right. And up was talked margin you mean about, I Okay, got quarter. in year-over-year when gross your the you. then

So good. that's

release I products customers most think the for favorable does what and and you in margin? favorable are elaborate press gross mentioned on particular mix. mean? that product Can What you in customer

to a not for combination. report up a I different actually is lot which lot slight product different combination a point And said. me it's you shifts products, mean a particular back a what bit. not sales I Linda, of can the correct of we customers. and did that go let over There's Carousel The one and of report were FYXX,

the Mainly it of then first because quarter declined and afterwards.

a bit But, of that of And regular profit. to a the Linda, mean, to. but also, continuing margin; going did point back lot a gross things price it's produce because I up answer generated improve of combination promotion to it that extra different sales that item question, was say the can one not it's little hard try not we that to of it's and we off

be for I your channels on Amazon and products correct. e-commerce mean are higher like With margin lower Amazon of many you. or sold gross

We don't we don't, margins Linda, customer. report by

our Okay. definitely we of But be customers. shy Amazon from And away range other math. all should in the

of mentioned, you what investors, And or you all then Okay. revenue e-commerce have to through is reported think channels? anywhere I well, mentioned percentage now

remarks I in we the that quarter. made; that the fourth and Well, said

And in the year.

was year And in the that XX% through e-commerce.

When you exclude credit card.

card. When you exclude credit

it's a still huge, huge it's So It's a XX%. percentage.

high. increased really does Yes. mean, I have must how that's pandemic, to there Okay, that compare number FYXX? a like the And in have you do

may That include that We Carousel. Linda. have will

No.

It doesn't.

to number was XX%. last that So closer year the say lower

up picked points. it XX So

Yes.

Okay. Well, companies, pandemic. that seen that's many we've during for the

provide to something for one mentioned year. also where that's pretty chain been Or you restaurant whole much closed talking you you So Are referring customer the about some else? you certain a are product?

we remained And they but closed as we're were dining. open, that concerned, chain as have far just talking the one they the inside we're didn't about. restaurant No, say closed, they that's were

So they didn't our use product.

should now with change correct? that of reopening And pretty Right. the soon everything,

so. hope We

We some between little have the few Linda of just to of a right take it's of place. stores it's reopening. seen sort far But And starting -- and now. it's bit

percentage couple was would was of of -- mean, say? that that a was you a points mean a loss I sales your that material? loss I of

Yes, it was material.

You're close.

Okay.

made it cry. us we, that enough was There

in to on of reopening the to furnishings? your any I'm you done I is. Yes. pandemic, goods their off? And areas. I talk been consumer will have their you gauge demand you don't the many think lot a good. Is baby's kind viewpoint redone looking. that's forward what things But has the do seen Or they mean, then have there of been behavior view lift it's change have your any, on will during And companies do just know want once trying revenue And occurs? a And home taper so it? very, your, very like they've that Or I and mean growth especially this? rooms

we our online My that not have going trend enough tells and on can is that to reverse itself. instinct don't to information where the don't me part, we shopping down. really make gut nail We speculation towards

I to as shift there's up, think stores a back shopping. towards open going still heavy Even be online

Okay. you were And your you said loan, PPP then on forgiven that.

the how So we classified? that Or balance as and won't does debt get does That work goes just on see out that that anymore? how sheet?

be a on statement, debt operating longer and the non income That will it but be gain. be will it'll gain a no

companies sort finally, shipping inflation product cost the of just Are the of pressures, Asia? any seeing you then, you and about lot delays. delays from cost And freight Okay. various in have getting are talking What been a side? of terms experiencing

the Linda, we increases rates. we it appreciably. to mostly, and are are possibly seeing coming out rate. better We as we a could, effects we Freight rates seeing, little of of freight done by ourselves couple a carriers as and much are feeling the yes, as had Asia cost get up major doing to of particularly relates that

So as some we're not but are, it's us. bad still as affecting

increases We out we seeing pretty sort of bag. have on coming out increases it's on seeing goods Asia. material, of seen Asia, and mixed freight seeing some much And price everybody But of raw as purchase increases yes, is are coming and product. a price

Or do thinking you looking to you thinking you along retailers cost what that offset? how initiatives? are to -- try at are Are reduction that you and you'll to consumers? Or pass

not. as be we recover Probably we to pass mission as we as along tenacious Will this, all where can. But we it'll much pass we that. possibly on as get And pretty mean, done I our can much we're Linda, always it through? we will, and can. we've

you already taken Have price increases?

have, we people yes. some On

acquisitions? activity deals I've M&A companies And some been stepped up my lot with actually all of that up about looking and you're of you you in such have additional the kind in of couple in A area, just marketplace there's a had these facts, recently. you any have finished a Okay. a considering that thought Since year, anything front? on and position. good at strong Are

and for to regular on sheet, is continue afford can at you pristine we to basis. know, Linda, to will acquisitions we our And looking look acquisitions. a continually as stay have we balance ourselves. an appetite where avail at And

present So the opportunity they themselves. might that

I'll stop. and So where yes, we're looking. always looking We're always that's

the be What a up take would deal? highest you do to level would leverage

to know if fail, an on mean, they thing we want go a to it I leverage right some appetite not I don't the it bet people do leverage. not But were do be, lot there. of to have don't which I one fails; company we're But we're going deal, the and company. whole would have if Oh, to some put the we acquisition, on the do, would whole to going that. would

have many. you one grow. your I the that kind Okay. just efforts internationally But good of while one so up had talked with And ramping for of some sorry, then, me. sales know a I about last ago

had kind grow, did of the company international or in lower line with sales So in on the you fiscal year the or line? higher

as had keep plan an forward -- to still effort doing itself in International But was also it but future. correct we We And slight -- went to we expected. -- do therefore do to as well we that. too the short the we by pandemic. going we a that. it And going so that's so bit, think have didn't up affected

And international is e-commerce as brick-and-mortar? well? some just they you sale; your internationally doing in are Are

We're both. both. doing we're We're both. doing No, doing

John question Adessa will And with our from come Pinnacle. next

might legacy on Are the actually there's Good morning, It's going still what brand, exploit detailed you there list assets to the know thanks probably might Are assets with? just able emails. good was happened able curious, be there. to any there forward? fixed customer that for to everyone. you I You color that any do something a own there Carousel. with be

most artwork, the of own notably, We still large. library own we I is own brand. still the Well, yes, pretty the website. John, which still We mean,

there yes, pretty the do much anywhere our hard we and answer Okay, company. products to divisions? some to is the So PP&E, transferable is assets, which the that no, are domestic don't some the in of other manufacturing assets, else because in

we are soft other transferable. those disposing not But the are yes, off. transferable. those So are they And assets,

with there your initiative Is addresses to other cross-sell brands? any email

And We direct Well, I mean, consumer. the are ship through to for to division And retailers. we other retailers, consumer. sales our and the email addresses do. direct sell those drop don't

So addresses aren't the transferable, to so speak. email

right, understand. you're Okay,

appetite As going for your experience businesses forward? additional with Carousel done anything your direct-to-consumer for

it USA expensive, And learn say the one. a quite USA a is, Two, We've in of the products. did made pay doesn't lot. question. I is the want Made is consumer would what yes, no we learned in to price

it. So on up is three, on the to wind up of internet top the having discount you And position cost quite four, the getting expensive.

-- attractive of somewhat as think. is people it's not most it as So

Right.

did Well, 'XX. I guess, mean, it. I always And probably you're Okay. hindsight, you glad

lot. it'll learned And help forward. You a your business going

those we that a John, we've Well, have had mean, over make years. we're decisions to tough decision. I make we We'll this to. again, But regret company when proved the the we and

the conclude to any conference the I'd question-and-answer over like remarks. will to Chestnut turn Randall This back closing for session.

call thank very was And everyone thanks to much. the on today. Cole, you who

a quick Just closing few comments.

were began to part As the a about was of we of the lot COVID-XX. year concern. And there we due that concern FYXX,

staff, I you. good you we to year. forward sales, a earlier. We'd increase our huge of our like thank adjusted as our customers, a the end QX. we response And valued was to quick shareholders day. leading you to at all the With We FYXX in repeat look Have accordingly, to suppliers, employees, year. Thank a make to thereby a thank very of FYXX and good with Again, alluded much. great of internet speaking

Bye.

Thanks.

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

this disconnect at You lines now your time. may