Crown Crafts (CRWS) 15 Feb 232023 Q3 Earnings call transcript

Good day, and welcome to the Crown Crafts, Incorporated.

Third Quarter Fiscal Year 2023 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

turn over to Chief Craig like Officer. Financial now the to conference Demarest, I'd ahead. go Please

XX. today Time Jason. this end you, through call of With A after company's third conference the the Executive Chief be on for quarter Elliott, p.m. Officer. me X:XX available President XXXX. hour and year replay Thank call fiscal to will the of Welcome of May the Crown telephone Olivia Central the call is Crafts investor one

a this accessed for visiting Also, of XX-days and our www.crowncrafts.com. available replay will be web call at can by be website

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

over now the Olivia. will turn call to I

Craig. thank conference XXXX joining morning, you fiscal third you, call. our Good and for quarter everyone, for us year Thank

in noted was, during challenges quarter. we this macroeconomic went that ongoing our our As demand, the impact inflation press morning, than expected our to general, worse consumer to out related third release continued in which

some We for lower normal well advantage sheet of the headwinds strong, challenges, balance more conditions. to for which excess future experience In of replenishment opportunities and these our orders still positioned spite markets believe growth to we return to also we're and remains inventory. the retailers withstand continue take have current items when

I'm and little he'll look to to and more then level, going at over I'm going high the results the detail. quarter a to a turn third into go Craig, call at

Year-to-date net down $XX.X $XX million, year. down quarter $XX.X from were last last million, from Third were net year. million sales $XX.X million sales

levels due concerns. to situation during holiday many contributed have spring. lower-priced After during by sales are the now decline. has situation been forces quarter XXXX, inventory calendar building patterns, down whereby retailers a trading resulting items over-inventory fewer experiencing season empty issues, foregoing the the of altogether shelves Multiple port items consumers consumer their by or responded the in This first up in to buying by some to exacerbated items, XXXX inflationary to late buying in marketplace change due

In in-stock we consumers, cases, where aren't sell-through. new on many continue their replenishment data place lowered retailers partnerships keeping to and retailers response, retail levels. see It can to to in up we note orders sell-through important many remain is that our items. have strong, with At

million diluted million Third Protection year last quarter diluted $X.X of or net Paycheck of $X.X $X or was net $X.X $XXX,XXX a our Program income share, per $X.XX with or loss compared with $X.X net diluted related to per million or year. gain diluted almost and share compared $X.XX per last $X.XX Carousel $X.XX per income Year-to-date was Designs. share, included loan forgiveness income million share. Prior million year-to-date an

of impact million line forgiveness on or the share. Carousel been the diluted $X.X have cash borrowings Excluding Designs, with year-to-date We of $X.X million our and $X.XX the quarter prior loan finished no credit. would revolving net and in income per

see Chinese of end December New during remains third a at were the quarter, end period with approach reduce high Although we $XX.X the we quarter to at million the levels a of inventory the inventory at which our able inventory our little increase we in Year. compared million $XX.X in as typically XXXX, an

in closeout to to In new the sell than majority for room we've move of customers. We inventory normal in-line that to continue is to inventory and some we to we have cases, be diligent retailers order products. which also on some in intend discounts current provided to managing taken some inventory, programs, higher make reserves

to will couple of next quarters. inventory that return believe to levels the our normal close We over

X.X% that stock paid close share cash Board at to announced also per on business record our of closing X, yield Directors stockholders. April declared This can XXXX. of remains annualized the on We company's continue long-term based XX, on common to an to sheet yesterday's an and return be price. $X.XX on value our We're will that represents shareholders that the XXXX, commitment strong, our March we of dividend our very balance of pleased

excited and sales, growing as further direct-to-consumer maximize the challenges. improve to costs, our current organically remain about enhance We time, same toy includes we're increasing face At strategic operating our our through offering opportunities reducing the structure. move making our forward to investments both of organizational our business profitability in long-term with and we product technology which acquisition, expanding category, plan, and our managing our the in

turn I'll over Craig. the now to call And

Thanks, I'll only give Olivia. financial highlights.

company's For I'll Form the this filed refer XX-Q morning. analysis, detailed SEC the a to you with more

mentioned, year, net the were for Olivia quarter compared fiscal third $X.X for quarter sales decrease the prior a of the $XX with of million million or ’XX, As XX.X%. million third $XX.X of

million, current more current We're in than by part prior and quarter seeing in sales decreased current the bibs, struggling while products Sales quarters, and a so to holiday purchases. toys the that Sales customer also their of lower to spending consumers the $XXX,XXX year accessories to in discretionary approximately as of effect $X.X by were quarter. declined $XXX,XXX. macroeconomic diverted conditions, and of disposable sales blankets retail bedding, in due decreased

fiscal XX.X%. 'XX and decrease with million. $X.X million or sales period million to a same the products by million million by of months disposable and for $X.X prior Sales decreased accessories compared bibs, nine bedding, toys of of for and first $X.X the $XX.X sales $XX.X in decreased year, blankets the of Net decreased

during replenishment primarily are inventories customers increased, The to from their company's as purchases because lower quarter purchases which first resulted to 'XX consumers' conditions. retailers believe excess the customers' we calendar macroeconomic inventory decreases sales response reduce continue in orders to the of due at and

by XX.X% nine-month sales period Gross the the XX.X% million, same by Gross year. quarter year net year million decreased $X.X to prior for sales decreased increased and of for sales of year profit in the of XX.X% from to from sales net net current profit for for net $X.X period the XX.X% the but decreased prior current quarter. of

amount in of gross and is in period with in business positive associated first is the sales year profit the decrease The $XXX,XXX quarter closure of of the recognized of net which a gross the Carousel, a as decline loss prior the the of of impact during of nine-month period closure the in result ‘XX. the fiscal the

the prior realized company costs. period gross the year chain, profit increases some impacted in its the was nine-month Although across in supply input costs the the has in current in by entire stabilization year

Marketing $XXX,XXX, expenses decreased from from the administrative of by in has to prior benefited increases our for but net decreased net increased selling quarter period $XXX,XXX, year. expenses the sales the for company year of quarter. the the net for of prior in nine-month Finally, year recent sales of net products. Marketing but XX.X% for current and XX.X% XX.X% the from same increased prices XX.X% sales current of and sales period the administrative by year to

incurred of continuing The the just tax period income XX% XX.X% for effective from Carousel. effective rate continuing period annual $XXX,XXX an rate annual year as the based of of prior with operations in tax taxes provision recognized the of current for items million estimated year-to-date operations upon an from estimated the prior is compared loan. year. charges prior nine-month Other forgiveness by year from gain PPP a under The included nine-month $X include

of the excluded X associated permitted of the approximately the to The period gain the from the by rate for income, effective loan forgiveness PPP which points. on percentage taxable of extinguishment effect debt lowered was with year tax be prior

to and options. year of prior the and as quarters, the adjustments stock of reserves current vesting the or liabilities with exercise arising both tax tax benefits During associated recorded company stock tax excess non-vested for shortfalls income expense unrecognized the as well from discrete

the rate and combined income continuing for prior the current provision resulted taxes of the of with period. income tax in from XX.X% an effective operations, year X-month period The comparable effect for tax XX.X% year items, overall the discrete for

months diluted first for same million ‘XX share Net period fiscal $X.XX for diluted diluted income net ‘XX. 'XX. or income compared $X.X $X.X the was fiscal in of income $X.X was to of or share Net fiscal third share for per ‘XX share of the income diluted or net compared million the for the to per third $X.XX of per $X.XX X quarter million $X.X quarter per of $X.XX or million fiscal

with that, And will I turn the back to call Olivia.

open line questions. the Jason, up for you, Thank we'll now Craig.

you. Thank

We will Laurelcrest Our from now session. begin [Operator Please Capital. first Instructions] question-and-answer Michael from the question Bernstein ahead. go comes

Olivia, morning. good

you? morning. Good How are

the Buy now? Baby. How I you sales Are were probably that that's are you Good. coverage with noticed -- Buy you customer with said and getting down $XXX,XXX but credit one customer How you? are much --

not. are We

And have... do you

We are no shipping longer them.

exposure? to you them. Do any You're not shipping have

little a not exposure. very but much, we some. have do It's bit We have of

the them with do you did year? business much how And prior

They were business. about of X% our

X%?

X%.

you. X% sorry. I X%? I'm I'm sorry, say hear Did or you couldn't

X%. X% X%, yes. to about Somewhere

very Okay. Thank much. you

You’re welcome.

go comes Our next from ahead. Please question from John Deysher Pinnacle.

morning. Good

in space those question confirm a quick shelf accommodations a space? your allowing terms want shelf making you your sounds like I to lot feel accommodations are to that customers. to the to Just And -- of you you're maintain here. of just It

We you space strong. overall, gain our But very a anything remains as a shelf peg. do. goes, I mean, lose you peg,

problem as levels biggest consumers to I the that aren't think is buying. customers same the the the are reordering

Okay.

as a sales of more for it's space reason losing shelf headwind the you than the So macro decline?

Correct.

Okay.

Okay.

the can idea is? you dollar Buy what an Regarding Buy exposure, Baby the give us amount of

less It's $X.XX than million.

than million. Less $X.XX

good. Very of of any customers Are kind distressed your right. other any like Okay. situation All that? in

Not continue else, ship credit to to coverage. and mean, that continue we of. aware we're the everybody I get

receivables? Okay. And collecting difficulty no

Nope.

Okay. Great, much. thank you very

you. Thank

session. like Elliott to closing questions There remarks. question-and-answer conference Instructions] any in concludes to no This more over would are turn I for the [Operator our the queue. Olivia back

to you, quarter We the Thank release and results. a our fiscal company. June support XXXX you forward in your everyone, Thank to all when you. look talking And suppliers interest for we of fourth thank you. to customers. special our year and continued again thanks And in and employees,

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

You may now disconnect.