Crown Crafts, Inc. (NASDAQ:CRWS) (the “Company”) today reported
results for the fiscal 2018 first quarter, which ended July 2,
2017.
“While we are not satisfied with our first
quarter results, we believe we have reached a turning point, and
that the acquisition of Carousel Designs combined with our ongoing
development of new, appealing products will drive improved
results,” said E. Randall Chestnut, Chairman, President and Chief
Executive Officer. “Our current results reflect the impact of
previously reported factors, including changing consumer
preferences for baby bedding products and the overall softness of
the retail market. Also, approximately half of the first
quarter sales decline can be attributed to reduced shipments to two
major customers – due to credit difficulties at one customer and a
shift in timing of a modular program at the other customer to the
second quarter of the current fiscal year from the first quarter of
last year. We remain excited about our long-term prospects
for profitable growth.”
Financial Results
Net income for the first quarter of fiscal 2018
was $518,000, or $0.05 per diluted share, on net sales of $13.6
million, compared with net income of $1.1 million, or $0.11 per
diluted share, on net sales of $15.6 million for the first quarter
of fiscal 2017. Gross profit for the current-year quarter was
26.4% of net sales, compared with 27.5% in the prior-year
quarter.
Allocation of indirect costs related to
inventory negatively impacted the Company by $398,000 in the
current-year quarter and $99,000 in the prior-year quarter.
Excluding these impacts, the gross profit percentage would have
been 29.3%, net income would have been $804,000 and diluted
earnings per share would have been $0.08 for the first quarter of
fiscal 2018. For the prior-year quarter, those results would
have been 28.1%, $1.2 million and $0.12, respectively (see the
accompanying table for a reconciliation of the Company’s GAAP
measures to the non-GAAP measures referred to above).
The Company also recorded certain pre-tax
expenses in the first quarter of fiscal year 2018 totaling $206,000
that did not occur in the first quarter of fiscal year 2017.
These expenses included $90,000 in audit fees, $64,000 in credit
coverage fees and $52,000 in costs associated with the Company’s
acquisition of Carousel Designs.
Acquisition of Carousel Designs
As announced on August 7, 2017, the Company has
acquired the assets and business of Carousel Designs, LLC, based in
Douglasville, Georgia. This strategic transaction immediately
transforms the Company’s online presence, providing a major sales
channel for the Company and enhancing its direct-to-consumer
business. Carousel Designs will be operated as a wholly-owned
subsidiary of the Company and is expected to be immediately
accretive to earnings. The Company funded the acquisition
with cash on hand and remains debt-free.
Quarterly Cash Dividend
The Company also announced that its Board of
Directors declared a quarterly cash dividend on the Company’s
Series A common stock of $0.08 per share, which will be paid on
October 6, 2017 to shareholders of record at the close of business
on September 15, 2017. “We are pleased that the Company’s
strong financial position enables us to continue to reward our
stockholders in return for their ongoing support,” Chestnut
said.
Conference Call
The Company will host a teleconference today at
1:00 p.m. Central Time to discuss the Company’s results and its
acquisition of Carousel Designs, during which interested
individuals will be given the opportunity to ask appropriate
questions. To join the teleconference, dial (844) 861-5504
and ask to be joined into the Crown Crafts, Inc. call. The
teleconference can also be accessed in listen only mode by visiting
the Company’s website at www.crowncrafts.com. The financial
information to be discussed during the teleconference may be
accessed prior to the call on the investor relations portion of the
Company’s website. A telephone replay of the teleconference
will be available one hour after the end of the call through 4:00
p.m. Central Time on August 17, 2017. To access the replay,
dial (877) 344-7529 in the United States or (412) 317-0088 from
international locations and refer to conference number
10110847.
About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and
distributes infant, toddler and juvenile consumer products,
including crib and toddler bedding; blankets; nursery accessories;
room décor; burp cloths; bathing accessories; reusable and
disposable bibs; and disposable placemats, floor mats, toilet seat
covers and changing mats. The Company’s operating
subsidiaries consist of Crown Crafts Infant Products, Inc. in
California, Hamco, Inc. in Louisiana and Carousel Designs, LLC in
Georgia. Crown Crafts is among America’s largest producers of
infant bedding, toddler bedding and bibs. The Company’s
products include licensed and branded collections, as well as
exclusive private label programs for certain of its customers.
The Company’s website is www.crowncrafts.com.
Forward-Looking Statements
The foregoing contains forward-looking
statements within the meaning of the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. Such statements are based upon
management’s current expectations, projections, estimates and
assumptions. Words such as “expects,” “believes,” “anticipates” and
variations of such words and similar expressions identify such
forward-looking statements. Forward-looking statements involve
known and unknown risks and uncertainties that may cause future
results to differ materially from those suggested by the
forward-looking statements. These risks include, among others, the
inability of the Company to achieve the anticipated benefits of the
Carousel Designs acquisition or to successfully integrate the
acquired business, or to do so within the expected timeframes;
revenues following the transaction may be lower than expected;
operating costs, customer loss and business disruption (including
difficulties in maintaining relationships with employees, customers
and suppliers) may be greater than expected; competitive pressures
on product pricing and services; general economic conditions,
including changes in interest rates, in the overall level of
consumer spending and in the price of oil, cotton and other raw
materials used in the Company’s products; changing competition;
changes in the retail environment; the level, timing and pricing of
future orders from the Company’s customers; the extent to which the
Company’s business is concentrated in a small number of customers;
the Company’s dependence upon third-party suppliers, including some
located in foreign countries; customer acceptance of both new
designs and newly-introduced product lines, actions of competitors
that may impact the Company’s business; disruptions to
transportation systems or shipping lanes used by the Company or its
suppliers; and the Company’s dependence upon licenses from third
parties. Reference is also made to the Company’s periodic filings
with the Securities and Exchange Commission for additional factors
that may impact the Company’s results of operations and financial
condition. The Company does not undertake to update the
forward-looking statements contained herein to conform to actual
results or changes in our expectations, whether as a result of new
information, future events or otherwise.
CROWN CRAFTS, INC. AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF INCOMESELECTED FINANCIAL DATAIn thousands, except
percentages and per share data(Unaudited) |
|
|
|
|
|
Three-Month Periods Ended |
|
|
|
July 2, 2017 |
July 3, 2016 |
|
Net sales |
|
$ |
13,647 |
|
$ |
15,599 |
|
|
Gross profit |
|
|
3,602 |
|
|
4,287 |
|
|
Gross profit
percentage |
|
|
26.4% |
|
|
27.5% |
|
|
Income from
operations |
|
|
701 |
|
|
1,448 |
|
|
Income before income
tax expense |
|
|
721 |
|
|
1,490 |
|
|
Income tax expense |
|
|
203 |
|
|
387 |
|
|
Net income |
|
|
518 |
|
|
1,103 |
|
|
Basic earnings per
share |
|
$ |
0.05 |
|
$ |
0.11 |
|
|
Diluted earnings per
share |
|
$ |
0.05 |
|
$ |
0.11 |
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding: |
|
|
|
|
Basic |
|
|
10,044 |
|
|
9,979 |
|
|
Diluted |
|
|
10,055 |
|
|
10,025 |
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETSSELECTED FINANCIAL DATAIn
thousands |
|
|
|
|
|
|
|
|
|
July 2, 2017 |
|
|
|
|
|
|
(Unaudited) |
|
|
April 2, 2017 |
|
|
Cash and cash
equivalents |
|
$ |
11,903 |
|
$ |
7,892 |
|
|
Accounts receivable,
net of allowances |
|
|
13,086 |
|
|
15,614 |
|
|
Inventories |
|
|
15,558 |
|
|
15,821 |
|
|
Total current
assets |
|
|
42,349 |
|
|
41,110 |
|
|
Finite-lived intangible
assets - net |
|
|
2,939 |
|
|
3,128 |
|
|
Goodwill |
|
|
1,126 |
|
|
1,126 |
|
|
Total assets |
|
$ |
48,215 |
|
$ |
47,184 |
|
|
|
|
|
|
|
Total current
liabilities |
|
|
8,658 |
|
|
7,573 |
|
|
|
|
|
|
|
Shareholders’
equity |
|
|
38,839 |
|
|
38,923 |
|
|
Total liabilities and
shareholders’ equity |
|
$ |
48,215 |
|
$ |
47,184 |
|
|
|
|
|
|
|
|
|
|
|
|
CROWN CRAFTS, INC. AND SUBSIDIARIESNON-GAAP
RECONCILIATIONSIn thousands, except percentages and per share
data(Unaudited) |
|
|
|
|
|
|
Non-GAAP
Reconciliation of |
|
Three-Month Periods Ended
|
|
Gross Profit to
Adjusted Gross Profit
|
|
July 2, 2017 |
July 3, 2016 |
|
Gross profit |
|
$ |
3,602 |
|
$ |
4,287 |
|
|
Allocation of inventory
indirect costs |
|
|
398 |
|
|
99 |
|
|
Adjusted gross profit |
|
$ |
4,000 |
|
$ |
4,386 |
|
|
|
|
|
|
|
Net sales |
|
$ |
13,647 |
|
$ |
15,599 |
|
|
|
|
|
|
|
Adjusted gross profit percentage |
|
|
29.3 |
% |
|
28.1 |
% |
|
|
|
|
|
|
Non-GAAP
Reconciliation of |
|
|
|
Net Income to
Adjusted Net Income: |
|
|
|
|
Net income |
|
$ |
518 |
|
$ |
1,103 |
|
|
Allocation of inventory
indirect costs |
|
|
398 |
|
|
99 |
|
|
Income tax benefit of inventory indirect costs |
|
(112 |
) |
|
(26 |
) |
|
Adjusted net
income |
|
$ |
804 |
|
$ |
1,176 |
|
|
|
|
|
|
|
Non-GAAP
Reconciliation of |
|
|
|
|
Earnings per Share to Adjusted Earnings per
Share: |
|
|
Weighted Average Shares Outstanding: |
|
|
|
Basic |
|
|
10,044 |
|
|
9,979 |
|
|
Diluted |
|
|
10,055 |
|
|
10,025 |
|
|
|
|
|
|
|
Earnings per
Share as Reported: |
|
|
|
|
Basic |
|
$ |
0.05 |
|
$ |
0.11 |
|
|
Diluted |
|
$ |
0.05 |
|
$ |
0.11 |
|
|
|
|
|
|
|
Adjusted
Earnings per Share: |
|
|
|
|
Basic |
|
$ |
0.08 |
|
$ |
0.12 |
|
|
Diluted |
|
$ |
0.08 |
|
$ |
0.12 |
|
|
|
|
|
|
|
The Presentation of Non-GAAP Financial
Measures
In respect of this Press Release, in addition to
the Company’s presentation of its results of operations in
conformity with accounting principles generally accepted in the
United States (“GAAP”), the Company has also presented measures of
its results of operations which are not determined in accordance
with GAAP. These non-GAAP financial measures are related to a
presentation of what the Company’s gross profit, gross profit
percentage, net income and earnings per share would have been if
the charges associated with the indirect costs allocated to the
Company’s inventories had not been recognized (to arrive at
“Adjusted gross profit,” “Adjusted gross profit percentage,”
“Adjusted net income,” and “Adjusted earnings per share,”
respectively). The excluded charge is a significant component
in an understanding and assessment of the Company’s results of
operations. The Company believes that these non-GAAP
financial measures provide useful information and are important
indicators of the Company’s ability to generate cash sufficient to
declare and pay dividends, make strategic investments and capital
expenditures and meet working capital requirements and other
obligations as they become due. The Company uses these
non-GAAP financial measures internally to monitor the Company’s
operating results and cash flow and to evaluate the performance of
its businesses. The non-GAAP financial measures presented are
provided as supplemental information and should be considered in
addition to, and not as a substitute for, the Company’s GAAP
measures, including its gross profit, gross profit percentage, net
income and earnings per share. As these non-GAAP financial
measures are, by definition, not calculated in accordance with
GAAP, another entity using the same GAAP financial information
could possibly arrive at different amounts of these non-GAAP
financial measures. Therefore, the non-GAAP financial
measures as presented by the Company may not be comparable to
similarly-titled measures that may be presented by another
entity.
Contact:
Olivia W. Elliott
Vice President and Chief Financial Officer
(225) 647-9124
oelliott@crowncrafts.com
or
Halliburton Investor Relations
(972) 458-8000
Crown Crafts (NASDAQ:CRWS)
Historical Stock Chart
From May 2024 to Jun 2024
Crown Crafts (NASDAQ:CRWS)
Historical Stock Chart
From Jun 2023 to Jun 2024