Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today reported
results for the second quarter of fiscal year 2021, which ended
September 27, 2020.
“We once again demonstrated strong performance
with improvements in net sales, gross margin and net income for
both the quarter and year-to-date periods. We are pleased with this
performance, which has been driven by increased consumer demand for
our products despite the challenging economic environment,” said E.
Randall Chestnut, Chairman, President and Chief Executive Officer.
“Our financial position remains strong and we will continue to
maintain a tight control over costs. Additionally, our continued
focus on developing products that meet the high standards of
parents has led to our Sassy® Stacks of Circles™ Ring Stacker being
awarded Newsweek’s Best in STEM 2021 Award for all age groups,”
Chestnut continued.
Financial Results
Net income for the second quarter of fiscal 2021
was $2.5 million, or $0.24 per diluted share, on net sales of $21.7
million, compared with net income of $1.8 million, or $0.18 per
diluted share, on net sales of $18.6 million for the second quarter
of fiscal 2020. Gross profit for the current year quarter increased
to 32.8% of net sales, up from 31.6% of net sales in the prior-year
quarter. The net income of $2.5 million for the quarter was the
best second quarter since 2002, excluding the effect of a gain on
debt refinancing in the second quarter of fiscal 2007*, and the
best of any quarter in more than ten years.
For the six-month fiscal period, net income was
$3.7 million, or $0.36 per diluted share, on net sales of $37.9
million, compared with net income of $2.9 million, or $0.28 per
diluted share, on net sales of $34.5 million for the first six
months of fiscal 2020. Prior year net income was impacted favorably
by $292,000, or $0.03 per diluted share, due to a reversal of a
portion of reserves for unrecognized tax liabilities and the
related interest and penalties that had been previously accrued.
Gross profit for the six-month period was 32.0% of net sales, up
from 30.2% of net sales in the prior-year period.Board
Declares Special and Quarterly
Cash Dividends
The Company also announced that its Board of
Directors declared a special cash dividend on the Company’s Series
A common stock of $0.25 per share, along with a quarterly cash
dividend of $0.08 per share. Both dividends will be paid on
December 31, 2020 to stockholders of record at the close of
business on December 11, 2020. “These dividends are a reflection of
the Board’s continued optimism regarding our long-range outlook and
the strength of our future cash flow from operations,” Chestnut
said. “Upon payment of the special and
quarterly dividends, Crown Crafts will have distributed more than
$46 million in total dividends to shareholders since 2010,” he
continued.
Conference
Call
The Company will host a teleconference on
Wednesday, November 11, 2020 at 1:00 p.m. Central Standard Time to
discuss the Company’s results, 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 Standard Time
on November 18, 2020. To access the replay, dial (877) 344-7529 in
the United States or (412) 317-0088 from international locations
and refer to conference number 10148765.
About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and
distributes infant, toddler and juvenile consumer products. Founded
in 1957, Crown Crafts is one of America’s largest producers of
infant bedding, toddler bedding, bibs and developmental toys. The
Company operates through its three wholly owned subsidiaries, NoJo
Baby & Kids, Inc., Sassy Baby, Inc. and Carousel Designs, LLC,
which market a variety of infant, toddler and juvenile products
under Company-owned trademarks, as well as licensed collections and
exclusive private label programs. Sales are made directly to
retailers such as mass merchants, large chain stores and juvenile
specialty stores, as well as directly to consumers through
www.babybedding.com. For more information, visit the Company’s
website at www.crowncrafts.com.
(*) Adjusted net income for the second quarter of fiscal 2007 is
a non-GAAP financial measure. Reported net income for the second
quarter of fiscal 2007 was $5.4 million. After excluding the effect
of a $4.1 gain on debt refinancing ($3.7 million net of income
taxes), adjusted net income for the second quarter of fiscal 2007
was $1.7 million.
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
impact of the COVID-19 pandemic on the Company’s business
operations, 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 Company’s ability to successfully integrate newly
acquired businesses, the level 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.
Contact: Olivia W. ElliottVice
President and Chief Financial Officer
(225) 647-9124oelliott@crowncrafts.com
CROWN CRAFTS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
INCOMESELECTED FINANCIAL DATAIn
thousands, except percentages and per share data
|
|
|
|
|
|
|
|
|
Three-Month
Periods Ended |
|
Six-Month
Periods Ended |
|
|
September
27, 2020 |
September
29, 2019 |
|
September
27, 2020 |
September
29, 2019 |
Net sales |
|
$ |
21,659 |
|
$ |
18,560 |
|
|
$ |
37,864 |
|
$ |
34,502 |
|
Gross
profit |
|
|
7,094 |
|
|
5,869 |
|
|
|
12,117 |
|
|
10,420 |
|
Gross profit
percentage |
|
|
32.8 |
% |
|
31.6 |
% |
|
|
32.0 |
% |
|
30.2 |
% |
Income from
operations |
|
|
3,292 |
|
|
2,393 |
|
|
|
4,935 |
|
|
3,492 |
|
Income
before income tax expense |
|
|
3,290 |
|
|
2,382 |
|
|
|
4,930 |
|
|
3,518 |
|
Income tax
expense |
|
|
803 |
|
|
603 |
|
|
|
1,228 |
|
|
660 |
|
Net
income |
|
|
2,487 |
|
|
1,779 |
|
|
|
3,702 |
|
|
2,858 |
|
Basic
earnings per share |
|
$ |
0.24 |
|
$ |
0.18 |
|
|
$ |
0.36 |
|
$ |
0.28 |
|
Diluted
earnings per share |
|
$ |
0.24 |
|
$ |
0.18 |
|
|
$ |
0.36 |
|
$ |
0.28 |
|
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding: |
|
|
|
|
|
|
Basic |
|
|
10,208 |
|
|
10,143 |
|
|
|
10,189 |
|
|
10,131 |
|
Diluted |
|
|
10,214 |
|
|
10,143 |
|
|
|
10,193 |
|
|
10,131 |
|
CONSOLIDATED BALANCE
SHEETSSELECTED FINANCIAL DATAIn
thousands
|
|
September 27,
2020 |
|
|
|
(Unaudited) |
March 29,
2020 |
Cash and cash equivalents |
|
$ |
6,832 |
|
$ |
282 |
|
Accounts
receivable, net of allowances |
|
|
18,797 |
|
|
17,803 |
|
Inventories |
|
|
19,191 |
|
|
17,732 |
|
Total
current assets |
|
|
45,545 |
|
|
37,041 |
|
Operating
lease right of use assets |
|
|
4,029 |
|
|
4,896 |
|
Finite-lived
intangible assets - net |
|
|
5,174 |
|
|
5,577 |
|
Goodwill |
|
|
7,125 |
|
|
7,125 |
|
Total
assets |
|
$ |
64,417 |
|
$ |
57,173 |
|
|
|
|
|
Total
current liabilities |
|
|
12,826 |
|
|
6,479 |
|
Long-term
debt |
|
|
1,057 |
|
|
2,578 |
|
Operating
lease liabilities, noncurrent |
|
|
4,242 |
|
|
4,959 |
|
|
|
|
|
Shareholders’ equity |
|
|
45,507 |
|
|
42,436 |
|
Total
liabilities and shareholders’ equity |
|
$ |
64,417 |
|
$ |
57,173 |
|
|
|
|
|
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