Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today reported
results for the second quarter of fiscal year 2022, which ended
September 26, 2021.
“We are extremely proud of our team’s
accomplishments through the first half of this fiscal year,” said
E. Randall Chestnut, Chairman and Chief Executive Officer. “Despite
labor shortages, shipment delays and rising costs, along with the
inconvenience of having to close our main office for several weeks
because of damage from Hurricane Ida, management has done an
outstanding job working through these challenges to produce solid
results.”
“Our continuing operations have remained strong,
and we have taken several actions to strengthen our business for
both the short and the long term,” said Olivia Elliott, President
and Chief Operating Officer. “For example, we implemented a new
system to streamline our warehouse operations in Compton,
California, and we are constantly working to control expenses and
pass along increasing costs whenever we can.”
Financial Results
Net income for the second quarter of fiscal 2022
was $2.4 million, or $0.24 per diluted share, on net sales of $20.2
million, compared with net income of $2.5 million, or $0.24 per
diluted share, on net sales of $21.7 million for the second quarter
of fiscal 2021. Gross profit for the current-year quarter was 30.0%
of net sales, down from 32.8% of net sales in the prior-year
quarter. The current-year quarter included net sales and net income
of $8,000 and $7,000, respectively, associated with the Carousel
Designs business, which ceased operations in May 2021. The
prior-year quarter included net sales and net income of $1.5
million and $97,000, respectively, associated with Carousel.
Excluding the impact of Carousel from both
quarters, current-year net sales, gross margin percentage, net
income and diluted earnings per share would have been $20.2
million, 30.2%, $2.4 million and $0.24, respectively, compared to
prior-year net sales, gross margin percentage, net income and
diluted earnings per share of $20.2 million, 32.1%, $2.4 million
and $0.23, respectively.
For the six-month fiscal period, net income was
$5.1 million, or $0.50 per diluted share, on net sales of $38.9
million, compared with net income of $3.7 million, or $0.36 per
diluted share, on net sales of $37.9 million for the first six
months of fiscal 2021. Current-year net income was impacted
favorably by a pre- and post-tax $1,985,000 gain on extinguishment
of debt related to the forgiveness of the Company’s Paycheck
Protection Program Loan (the “PPP Loan”). The current year also
included net sales and a net loss of $639,000 and $795,000,
respectively, associated with Carousel, while the prior year
included net sales and net income of $3.0 million and $72,000,
respectively, associated with Carousel.
Excluding the impact of the PPP Loan and
Carousel from both quarters, current-year net sales, gross margin
percentage, net income and diluted earnings per share would have
been $38.3 million, 29.8%, $3.9 million and $0.38, respectively,
compared to prior-year net sales, gross margin percentage, net
income and diluted earnings per share of $34.9 million, 31.3%, $3.6
million and $0.36, respectively.
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 $0.35 per share, along with a quarterly cash
dividend of $0.08 per share. Both dividends will be paid on
December 31, 2021 to stockholders of record at the close of
business on December 10, 2021. “In challenging times like these,
the commitment of our Board and management team to deliver
consistent returns to shareholders is more important than ever. By
declaring these dividends, our Board recognizes the outstanding
efforts of the entire Crown Crafts team to manage through this
difficult environment and maintain our position to generate
long-term value,” Chestnut said. “Upon payment of the special and
quarterly dividends, Crown Crafts will have distributed more than
$52.9 million in total dividends to its shareholders since 2010,”
he continued.
Conference Call
The Company will host a teleconference today 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 February 8, 2022. To
access the replay, dial (877) 344-7529 in the United States or
(412) 317-0088 from international locations and refer to conference
number 10161702.
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 two wholly-owned subsidiaries, NoJo
Baby & Kids, Inc. and Sassy Baby, Inc., 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. For
more information, visit the Company’s website at
www.crowncrafts.com.
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,
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:
Craig J. DemarestVice President and Chief Financial Officer
(225) 647-9118cdemarest@crowncrafts.com
CROWN CRAFTS, INC. AND SUBSIDIARIESCONSOLIDATED
STATEMENTS OF INCOMESELECTED FINANCIAL DATAIn thousands, except
percentages and per share data(Unaudited)
|
Three-Month
Periods Ended |
|
Six-Month
Periods Ended |
|
September
26, 2021 |
September
27, 2020 |
|
September
26, 2021 |
September
27, 2020 |
Net sales |
$ |
20,220 |
|
$ |
21,659 |
|
|
$ |
38,932 |
|
$ |
37,864 |
|
Gross
profit |
|
6,068 |
|
|
7,094 |
|
|
|
10,724 |
|
|
12,117 |
|
Gross profit
percentage |
|
30.0 |
% |
|
32.8 |
% |
|
|
27.5 |
% |
|
32.0 |
% |
Income from
operations |
|
2,904 |
|
|
3,292 |
|
|
|
4,194 |
|
|
4,935 |
|
Gain on
extinguishment of debt |
|
- |
|
|
- |
|
|
|
1,985 |
|
|
- |
|
Income
before income tax expense |
|
2,978 |
|
|
3,290 |
|
|
|
6,252 |
|
|
4,930 |
|
Income tax
expense |
|
592 |
|
|
803 |
|
|
|
1,201 |
|
|
1,228 |
|
Net
income |
|
2,386 |
|
|
2,487 |
|
|
|
5,051 |
|
|
3,702 |
|
Basic and
diluted earnings per share |
$ |
0.24 |
|
$ |
0.24 |
|
|
$ |
0.50 |
|
$ |
0.36 |
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding: |
|
|
|
|
|
Basic |
|
10,053 |
|
|
10,208 |
|
|
|
10,028 |
|
|
10,189 |
|
Diluted |
|
10,094 |
|
|
10,214 |
|
|
|
10,071 |
|
|
10,193 |
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETSSELECTED FINANCIAL
DATAIn thousands
|
September 26,
2021 |
|
|
|
|
|
(Unaudited) |
|
March 28,
2021 |
|
Cash and cash equivalents |
$ |
1,904 |
|
$ |
613 |
|
Accounts
receivable, net of allowances |
|
18,485 |
|
|
19,338 |
|
Inventories |
|
24,234 |
|
|
20,335 |
|
Total
current assets |
|
45,339 |
|
|
41,470 |
|
Operating
lease right of use assets |
|
3,249 |
|
|
4,068 |
|
Finite-lived
intangible assets - net |
|
2,904 |
|
|
3,163 |
|
Goodwill |
|
7,125 |
|
|
7,125 |
|
Total
assets |
$ |
60,576 |
|
$ |
58,082 |
|
|
|
|
Total
current liabilities |
|
12,542 |
|
|
12,946 |
|
Operating
lease liabilities, noncurrent |
|
1,733 |
|
|
2,641 |
|
|
|
|
Shareholders' equity |
|
45,600 |
|
|
41,865 |
|
Total
liabilities and shareholders' equity |
$ |
60,576 |
|
$ |
58,082 |
|
|
|
|
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