CRWS - Earnings call transcript Q2 2018

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Operator

Hello, ladies and gentlemen, and welcome to the Crown Crafts, Inc. Investors Conference Call.

Your host for today’s call is Mr. Randall Chestnut, Chairman, President and Chief Executive Officer. At this time all participants are in a listen-only mode. a and conduct at will will time. that we question-and-answer instructions session follow Later this whole Crown call, is of reproduction Any in without written not or prior authorization Inc. from Crafts, permitted part, in XXXX. reminder, a being November conference And as this recorded is today, X, time, to the At to I call now would over like this turn Ms. and will Vice begin Olivia call. President Elliott, the CFO, who go Please ahead.

Olivia Elliott

and me Thank Chief the quarter of second call for you. the Chestnut, Welcome to Officer. Randall XXXX. Executive the today With Crown company’s a Crafts President investor conference is fiscal

Randall Chestnut

afternoon. Good

Olivia Elliott

A call hour telephone X:XX at website be after accessed available November Web will the Time be XX through www.crowncrafts.com. will a XX, for Central be of by call replay days replay visiting this call can available of XXXX. Also, our end one of p.m. the on the and

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

refer presentation company’s expenses share the may if the would of we per call, presented were certain period to have earnings the the of company’s incurred income diluted the During been and net excluded. what in

of the the Board over the disclaims the to common call declaration amount as exclusion principles accepted each listeners any believe does the in frequency company’s conference of results the recently and and the regard comments not now these the conform the in of to generally of more company we may call any with history made stock, the dividend. annualized company’s at to we of that is today’s assurances turn dividends of future United accounting States, provide announced yield I exclusion related company’s the expenses remind in Directors, of such that a Randall. expressly to the understanding company’s Although will dividend, paying on meaningful its and of operation. are Also, dividend that discretion

Randall Chestnut

quarter. in to ended the as of Olivia’s, was opposed anyone afternoon earnings $X.XX from were as quarter investor previous up X.X% Net it costs credit that for released In and After numbers at were the these to opposed the the earnings the the previous share, quarter. income market year. year recorded to fees were the I’m to be will the expenses last sales X and for the FY year same, this XXXX, numbers, year earnings October quarter the $XXX,XXX the an are questions. to XX.X%. share some would income retailer previous or the again and XXXX. the as same filed $X,XXX,XXX, Crown good or you, or for in completed as increase million, income would FY thank obviously, which year. we up everyone. year-to-date. $XXX,XXX, opened to before associated net quarter it Crafts, per to sales that this we’ll for you for also of Inc. bankruptcy These for this add And call follows: which to last same a back acquisition quarter, FY conference the not XXXX incurred and in down $XXX,XXX Olivia, on has were the Welcome bring and during $XXX,XXX touch were to these totaled coverage the $XXX,XXX numbers we $XX.X were Net numbers per And the quarter previous XX.X%. Designs, conclusion Diluted been Olivia Carousel the opposed year XXXX, $X.XX per be earnings would but more quarter be the if or on back, share $XX.X of per of of for Adding the that my net of then, second year. same results with expenses the going quarter. the they taxes, the comments quarter, $X.XX morning. second opposed address of and diluted have $XXX,XXX, share $X.XX would year Likewise, in million as second and

We’re the during sales quarter pleased to two prior Carousel a Designs months year this quarter posted X.X% with quarter. the versus in for help of increase the have

second our protection, that, During the with our quarter, and bankruptcy business, only storm weathered for was the down even we core largest filing of customer slightly.

have a great As potential that remain we Carousel the and future we about direct-to-consumer for to in earlier excited the programs products stated for shows this point the future. We the Designs we bright feel have model place acquisition, calls, in company.

gross profit year the profit the current quarter. was of quarter XX.X% net gross XX.X% up the for On sales, prior same side, the in year from

months, basis, on profit year-to-date XX.X% For to a year from six the XX.X% gross increased year. this last

With quarter we share. which funded announced the represents the ended a A declared of stock balance color. to shareholders an payment Board Olivia board’s the company’s on the quarterly continue – that of the a debt-free Directors our X.X% to to $X.X This be noted stock to business, completely of is XXXX. for close cash XX, paid based company’s was a common add by balance shareholders. we’re offer be Carousel and This that dividend dividend on Series the over cash be business of paying and the Designs, price. in side record after the on we pleased and of turn sheet of closing $X.XX hand. of of Today, balance to the with of will confidence of shareholders annualized the should million, this acquisition Once cash more to On business again, we dividend reflects it ongoing per X, December that, I’ll yield January as value commitment to provide on yesterday’s XXXX,

Olivia Elliott

to I’m only highlights. financial give going

X.X%. second were and Securities morning. $XXX,XXX Commission quarter million for filed fiscal sales $XX.X an the For or the more second the of year, prior with company’s this XXXX, compared the the to Exchange with Net details, please increase of quarter for million refer XX-Q Form of $XX.X

increase which in product. period, infant the were six-month the in of is $X.X is of sales increased profit Gross bedding year. $XX.X net prior Year-to-date, lower in an by The from of year Marketing that Carousel to the for point a for in $XX,XXX, with leading portion problem. associated were year for prior overall X-month of average current million, or net attributed quarter. quarter X.X% the sales by product increase the and Carousel a sales reduced for the experienced of the million customer XX.X% the $XXX,XXX, increase purchasing customer credit quarter an results gross of acquisition associated acquisition Designs. bedding August. million year the affecting from A prior results coupled sets to expenses sales result with retail of sluggish XX.X% sales coverage marketplace, for compared of the current the net the decrease of gross mainly the for were in continuing quarter Carousel increased by administrative year period net that that margin of to year to fees credit For $XXX,XXX with mainly XX.X% the shipments current change The bankruptcy which Designs infant separates, in a from year. increase for prior parents profit with $X $XX.X major period down price cost increased current six-month fewer Also were the of favor of environment, in the XX.X% from bedding the the as net from for result sales million company and a the to year is Designs. $XXX,XXX

by million with smaller due and to acquisition-related $XX,XXX fees compared with six-month expenses in administrative company’s the and accelerated period, from For $XXX,XXX coverage reporting year, to the fees, transition $X.X filer. audit cost associated $XXX,XXX increased the company an marketing credit a in prior

effective Additionally, from the provision Carousel the for assets rate income XX%. year, company year acquired The current operations $XX,XXX an intangible estimated annual expense current based Designs. tax in recorded from is with amortization continuing associated taxes of company’s upon for in the the

the a benefit and tax of discrete shortfall tax tax XXXX, the the increase divesting for arising was income to charge for of the from During benefit of $XX,XXX during of the of primary ended non-vested recognition The period. months taxes income the XX.X% company and and effect the the quarter. tax the charge X, in excess shortfall overall the tax factor provision income three current year October the to six $XX,XXX discrete stock in reflect recorded a

company’s the tax or anticipate $X.XX tax share source the quarter and the of net credits. $XXX,XXX certain impact income per XXXX, does Net change per share, company second $X.XX compared not rate of the rate, or several of balance the its the tax continuing for could XXXX. to of pretax $XXX,XXX Although effective of diluted diluted from quarter income to amount for effective the amount the the material in was fiscal variations fiscal income of including of XXXX fiscal from year operations factors and a estimates second

period the previously the quarter been and income Excluding have income $X.XX. share per would current fees $X.X and Net coverage have costs discussed acquisition million, would year $X.XX earnings net XXXX associated per first costs, been diluted or net share with for credit $X.X to for compared fiscal months the million $X.X same the diluted million in fiscal per XXXX. or $X.XX for was share of six diluted of income

filer, acquisition year-to-date fees from million, have an reporting I Excluding the accelerated the would the with call would $X.XX. credit previously return for share coverage period the earnings to been net company have now company’s per and current discussed will Randall. associated audit a been diluted costs income $X.X smaller with cost and associated transition to fees,

Randall Chestnut

much. Olivia, thank you very

you’ll the and that any take if have anyone Brandon, call. it open Okay, may questions on back up, come we’ll

Operator

Our comes with first Instructions] King Dave Capital. [Operator question Roth from

Dave King

I’m you sort is, hit added it of I of the Carousel so off, business? I first the was sure looks like think of of still general side business revenue a you guess, down the I year-on-year. on trough question the so, front? outlook that didn’t help. guess, what’s or And guess, rest million do for the bit the BRU $X.X that

Randall Chestnut

have for, week the did the break weeks track. or back in quarter. one in on I know, impact we bankruptcy an had don’t X.X the it by shipment got the we Dave, When a time occurred,

quarter. that at was and of right did So the the – end that

So obviously, we’re that encouraged not it. and business yes, that feel we help, the is okay? on core we track by did feel But

Dave King

the to hear. like good shipments And BRU? to That’s that have sounds Great. resumed after been it week last

Randall Chestnut

to back did. to shipping started ramp it up forth, place, off to were we while within We shipments. normal. some get we started Really, you get back because slow. and a get week, very it and so it We resumed to and had in but coverage changed able resumed took orders again, a After

Dave King

guess, the later? And other then, And could products to transitioned them do expect to It and expect make do products? the think how expect CCIP and for Okay. customizable soon be of make bedding, that you sense – getting ton revenue to synergies to you be Do you Crown model? do to helps. leverage would are sense from more when that then, able there Carousel more? toddler Hamco products ramping sense, make start what will a legacy have guess, could broadly, I website would than it for a I I you there? sooner

Randall Chestnut

were Infant off There of some None actually yet made licensed through those Dave, we’ve that that we’re and working have Web got CCIP, can on. and That of trade long. get the many there they before hard pages, horizon. to as Crafts able I – pressing products are things there can exciting some but But we are pretty been on as products lot hit take it your as And question, over pipeline Crown can. to the yesterday, Carousel. answer to of products, to as and Products, a be as Olivia we pedaling we’ve as possibly shouldn’t we through the fast we and

Dave King

last one one then, for And me. Great.

areas? of points much is, but was margin. know it, how or other right to mean, much of to gross XXX look more were – the so I there basis at offsets more savings it, that How Just all Was improvement, of or sequential or it the the it way don’t in I Carousel? of all than that? it on of what

Randall Chestnut

of head, Dave, way I Houston. their the in contribution we and you look since right so on a And was answering bit one to Houston effect our shaking – margin the Carousel to look the is for positive burden from as in improvement neutral okay? little, big during of some sales would effect, quarter. her largest but quarter that Carousel because did from some talking being that little them. should a an you affected we quarter, be – September. things have of which time, for I’m end it, the also hit quarter And happens the from keep at the storm was the to to had was a should at not happened this market speak, the a effect so contribution the Olivia be live, at It say, in of she’s too. by had there are Carousel lot the about no. And There Carousel, to that But time

Dave King

Okay.

sounds you it might don’t want to you assume So then – that, theoretically, to I to contribute want more that is I that higher-margin say know then, that Olivia, it, given me say to like it business, sounds want mean, but someone forward. me and want Carousel going then don’t – don’t I

Okay.

Randall Chestnut

As we platform, and I excited is good about about the pretty what direct-to-consumer, we’re said, a darn obviously, Dave, excited can – it. and And table. we’re that to Carousel the platform bring it

Operator

question is with Beder FBR. B. Riley next Our Eric from

Eric Beder

And still the out When impact – this – the to mean, responding you "R" take of kind the a basis. in if were you situation to lighter receding in that? sales, apples-to-apples impacted you I seeing product a you Us I Toys are – out take shift barely the look, you Are do less crib? negative how from you,

Randall Chestnut

way circled the crib, at it, about we’ve talked the the we’ve year cetera, looking one effect we’ve some taken and et have a things plus, to this for a been while, around now saying Eric, is year, naked that place. of been we’ve Yes. where

So us, we it. and, we’ve of year the behind have circled around that majority hopefully, that

flat. out looking you we’re are the way But take if and Babies"R"Us it, was you the right, Carousel out that’s of that. effect So you at take it

Eric Beder

Okay.

making that? So on progress you’re

Randall Chestnut

pretty our size, second largest our that and customer is the a And good. in we darn file quarter, company – to have or flat the bankruptcy remained

Eric Beder

we somewhat When I of numbers two the think business should we first same you to Carousel, thinking acquisition the Carousel be your the we by how forward? Is in were so impacted, here, agree. about thinking? the the Carousel how hurricanes, be business look if you months of I the at about had the seasonality this going rest have – guess, going has? And should

Randall Chestnut

Eric, not Well, have consumer know follow seasonality. you I and again, many from to forecast. are. closer we they’re than conversations don’t always seasonality mean, They some do Their the we does because seasonality our

shipped. the step for much to In sells possibly can consumer. case or be – the order, is from way said get ago, gross comes order we retailer, And on a it to of one to there we’re as out, positive you the to We’re the the product live, pedaling removed, the Carousel, Carousel as impact. in, places – the retailer the both sales at goes future we we the future sell it’s it’s But in the as the looking King a and from consumer fast as moment out as can. we margin effect very in Dave should

Eric Beder

and Okay. on million, that bedding the is that where – that only The they is $X.X are – entirely blankets. hitting – does

Olivia Elliott

combined Yes. blankets in and it’s bedding They’re category. – in the the

Eric Beder

quarter? this business bibs the in growth the drove What Okay.

Olivia Elliott

out I’m you sorry, bit. kind little a of cut

Eric Beder

almost, don’t drove What bibs business? up X% It here? I the was X%, know,

Randall Chestnut

gained to We’re space, we of one placements we’re right that. point, year, the at retailers had about XX% shelf some having now XXX%. fairly major where, close strong a you’re We some at

we business the that in XX% is about know area from control good got previous feel And U.S. were we our really about. we’ve bib of gains experience, you’d So marketplace. the – some

that So very we’re area. strong a player in

Operator

any This concludes the I back our conference remarks. question-and-answer to over session. would for to turn like Chestnut Randall closing

Randall Chestnut

Brandon, And thank to everyone and the much. questions. call. very thanks was on you Eric the that Thanks for Dave to

and our our with financial overall strong to we’re a up, pay pleased wrapping position Just dividend. ability

of We’d Carousel to future. support Thank you. Have customers thank quarter. sales the Designs. The speaking you a with offer excited very and look employees, also platform we forward their addition to feel company about like a and we good a the of next direct-to-consumer our for is shareholders to all We’re through suppliers, encouraged continued about solid Period. and day.

Operator

has you conference attending The presentation. today’s Thank for now concluded.

disconnect. now may You

Crown Crafts (CRWS) 11 Nov 172018 Q2 Earnings call transcript