CRWS - Earnings call transcript Q1 2019

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Operator

Hello, ladies and gentlemen. And welcome to the Crown Crafts, Incorporated 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 August 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

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

Randall Chestnut

afternoon, Good everyone.

Olivia Elliott

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

the annualized remind that conference Before statements Company's is same we the amount the any regarding applies made language remind begin, recently release. to disclaims expressly today's to to turn That call declaration to frequency its of conference Company's press yield announced common today's that like paying Also, as I the the listeners Board dividend comments are language of the future history call listeners stock. cautionary of and related comments made would call. now contained at to of in and of We in each the the over dividend, regard in discretion forward-looking in will Company the on the the dividends. Company's and Directors, dividends to of Randall. any I assurances

Randall Chestnut

good call. and afternoon to again Olivia, the everyone thank on you

do a the to XX.X%. $XX.XXX X, "R" - Grand FY year was million year, XXXX, ended merchandise. on sales in XXXX earnings income other been the Toys April last net we opposed $X.XX earnings move of QX QX, or the for to a for quarter quarter. were in "R" quarter completely of quarter per thorough competitor in "R" net "R" this or last December, the to we impact negative April Sassy share FY any shipments and - the California. $XXX,XXX of year, of had inventory to $XXX,XXX of void QX Compton, the expense this on for that incurred This from Rapids, their a $X.XX diluted Michigan US/Babies that of of have Us, which represented became $X.X customers, to year. liquidations, replaced At discounts Us same Toys last major million or Before has follow which end Babies the in business net line for because included by level Us, the per deep this the of then the store sales us last that quarter will will and information acquisition go in anyone earnings first XXXX them. questions July as were quarter same and the Sassy the I’ll this opposed our for XXXX, after of of to invite $XX.XXX Diluted Addressing or released And was made as the Olivia were $X.XX some we year an of period Net through last opened XX%. we up, and morning, $XXX,XXX quarter share market which as XXXX. in a decrease income $X.XXX Net or $XXX,XXX when income million year. announced increase we $XXX,XXX this first

to "R" difficult volume is US/Toys product Crafts XX.X% made profit quarter we the the Products portion in it lower gross the net for US to reallocation by increased In last sales through net same XX.X% customers other the the in consumer, the of year. for of replacing "R" sales addition, slightly cover "R" a year. from subsidiaries volume the loss Infant quarter. Crown our The to through fixed impacted Once to sales in sold us later Babies anticipate of cost the our the of this US, Hamco, sales in Babies year

We're at finished revolving million, sheet and a the line $XX.X on On XXXX. quarterly of the stock quarter, its October of balance morning able LIBOR quarter pleased side, X, of reduction represents of dividends. get immediate Board the annualized rate pleased The availability announcement, borrowing continue executed CIT, with This that plus that a we've Company plus on made $X.X extension our yield business on to an X.X% record $X.XX September line X of of interest closing with We're be million. the of credit shareholders includes in for XXXX end be we revolving to announced per of done. with to quarterly have or share, reward we the the capability from an close XX A a our common After three-year will our of on before cash yesterday's LIBOR price. declared of based of shareholders dividend to the credit the to which stock balance Directors also cash XXX. paid of unused extension this to which Series Company's

network XXXX. in opportunities XX We of plan Company the on have of show at a Cologne, the in never as and show international shown with It's the an this One We tradeshow Germany, Sassy, K&J September well of the industry. we had international show regarded we've before. now is a to at acquisition of that have distributors.

be back Sassy, for over the products I'll Olivia. to to be showing Neat it turn we'll Solutions, so Infant We're products back. that. be will come Hamco, then to We and And Products, this market. looking at forward statement international Crown Craft's consistent Internationally will Sassy. all a from branded show,

Olivia Elliott

highlights. And now give I'm going financial to

the more for first The million Designs to million of $X the Company's the million Securities quarter the this For of for sales million. acquisitions or filed Sassy, Net of detailed year, morning. were of XX.X%. fiscal refer Carousel added with increase with Exchange first and analysis, the Form $X.X and please prior compared Commission XX-K $XX.X XXXX quarter $XX.X an

one However, $X.X sales by the largest offset liquidation which this million quarter. the our in customers, of in to year prior sales increase represented was decreased due

the cost replacing anticipate the $XXX,XXX, in for XX.X% an Us "R" Marketing half business amount of core provision this of XX.X% quarter. of of prior year. effective tax provision compared profit Administrative the continuing current to quarter customers $XXX,XXX quarter the year, of year, annual XX% sale the Company's reallocation these current the to $XXX,XXX, to inventory cost incurred of the Gross we net and as XX%. the sales included the sales by current sales taxes tax California. of quarter effective $XXX,XXX the and net a The prior existing XX.X% was from net increase of is amount facility lower income January in amount the year. federal the in estimated against during to the primarily year a Babies to legislation deeply latter also increased to The increasing from net current was year in an to discounted in volume, increase to $XXX,XXX in current in prior sales Recent X, operations rate our by Although year, year includes Compton, from Contributing to corporate income CCIP sales prior and by not Us in in Babies the the competed of rate The portion from "R" with in distribution associated Carousel activity year upon liquidation expenses the sales is XX% Offsetting for this that quarter. Hamco for in increase was from Michigan year higher Rapids, tax the Designs lower current year. increases year. due advertising XX.X% Expenses increased were an as which based to incurred move XXXX. Grand Sassy

based April As for for lower fiscal XXXX, tax the ended an been year was phased a operations from fiscal year XXXX. the in the for company on had yet year company's of taxes effective estimated blended legislation on rate statutory tax rate the XX.XX% Because of XXXX income in, prior income rate not federal quarter the enacted resulting was XX%. provision corporate X, continuing

XX.X% was income an income income year. of XXXX first the benefit the in per unrecognized for diluted During taxes XXXX $XX,XXX. for $X.XX or now $X.XX income the tax the charges the $XXX,XXX discrete quarter. compared prior benefits of to benefit of period. benefit the rate share these The yield year benefits access first tax the year’s prior arising provision quarter The prior current was effect stock, tax fiscal first fiscal current and in a with first The recorded for to a of combined the for $XX,XXX per overall tax reflect quarter XX.X% tax from share on the for quarter of Randall. of resulted to operations call or turn the effective $XXXX the the in discrete recorded net company recorded in of the quarter will Net XXXX. company reserve of $XXXX year I during vesting quarter the in and of of continuing non-vested diluted and $XXX,XXX fiscal income also

Randall Chestnut

one up if our that open now very for on concludes and Olivia, it come Andrea will thank we’ll you much. line questions back you may and the - that any have. And remarks we’ll any

Operator

of King Please David ROTH from comes question first go Capital. Our Instructions] [Operator ahead.

David King

I it to Have soon you how you back Thanks. revenue replace look near see of think guess sounds incremental of that? it off, do replace have and we Target the able that to then some start will placements the visibility et from of what to sort the do offering how and and loss Buy BRU you term mainly? much begun half into over first be for like as of you Buy should cetera sort

Randall Chestnut

which at retail became and liquidation Through competitor. we exactly them the as it’s the much phenomena. selling were just merchandize Toys the "R deeply price. back prices original of shipped just in discounted off half Dave XX% quarter the you’re towards Babies"R"Us, to actually right, remarks, of we as a They had announcement end prior was current the a said some

an liquidation impact We not in think big is with it it. we or selling it ended purchased saw from after has on as number of store. are was that certain merchandize in a the Us - uptick and the see the did there some that through that going Toys they’re individual some stores is websites "R" in still we we as residual But accounts

be third to next going spread the it’s out So over a quarters.

David King

flag And orders then? then up placements for sounds the you it incremental other the like like pick is starting it to do sounds have

Randall Chestnut

And year. get anymore projections about well then projections date just of before until orders it’s we’re firm but for excited and you get some pretty difficult As the because remainder don’t know the good ship have you you we that.

David King

then bids to are your further bids we’re And gears Sassy environment point up given Carousel, asks following on acquisitions the at the center - at compared potential of and switching on how what’s point? this outlook this

Randall Chestnut

As product businesses with their core market expanding show we we’re capitalizing Sassy Cologne presence on said and in we September. the that and in we’re in international our the into in remarks, Sassy-branded that will

pretty there well on going So got product we and Carousel cetera. we initiatives et are doing a excited is sale development that. for new about lot of

As far period in on short did of a the horizon acquisitions as two other relatively we time.

sort we're taken we’re digest time got. We're moment. but what trying at we’ve still that the the of to and break a all trying digest looking So of sort to

David King

great. going well that’s at And these like you for deals least sounds so three - are

I think good the that in year. it luck Nice and managing from rest does with of me. job expenses

Operator

next Josh Please Advisers. Sterling from go Our Zenith comes of Peters question ahead.

Josh Peters

very I factors that to like within you congratulate to call taking well much managing would my and business Thank you're the your the here. control feel like for very

Randall Chestnut

you. afternoon, Josh. Good Thank

Josh Peters

got questions. I a couple of

million to Sassy, late terms or first is in run rate good term that million it transaction you a where coming was first for business. that it if to one indicated think its similar little this a it million put contributed the that's over contribution quarter. calendar announced out wondering year is of still longer figure release $X.X of you disclosed the sales quarter number amount $XX press $XX to last up the and The I'm on bit of shorter was The use Sassy I run that about rate? sales in that the you when was

Randall Chestnut

same hard a would would it very number. try that making Josh modeling a forward statement looking but purposes, do we for which and I not to use be

Josh Peters

potential China, overwhelming And have, merchandize us any I get taken was unfortunately really proposition then into topic and the would impact. of I I could your from of but since the you state update me you the other a into, is rather question source give politics, has on wondering tariff which geopolitics not an do this if

China already to has past? case you plans been like products tariff importing are addressing any what come threat affected that from So any by been be that and your are that us not, the a there would that they whether for orders have should or

Randall Chestnut

Josh to affect the be that don’t round like exact do in a we in being it we is it’s going have and parts going And later a the It’s that know of affected have We good date is as the September. - tariff that new to answer the one the sometime August. know to to part question in this affected I’ll and up another no. answer category have is point one third going one. anything we for

affected have a a small million the a They this. XX% smallest that I When of could two problems. of - out is dollars be say some way be annualized a tariffs we the could have few We that to really that few, and can by it’s related affected by and we few. every on

and product or those So factor XX%. in a that’s there the is price either the do the we’ll out discontinuing change raising by product, on with not there major XX% that

disposal up of is affected two it reason that’s XX% the call in sorry end cable effect is table the around at one, for into which I is So item placement the an we this one but around a - two really August. called toppers goes is some for am tariff and categories that

the tariff, is - there the a and we speak. and to intent on very we market with and process as of in increase share doing we large have price we're intend pass Our which the finalizing

that is and have is user on, made bib we of and retailer, combined we're we've going the the the to major small, and to they're everybody of major to already user, conversation one that up that in increase other be a itself The really certain a and caught size that one had pass and are going fabrication tariffs, one price else it. lends accept with

So it items and hope Really beyond get crazy business, an across unfortunately, knock boils those, and on it address has wood, down, that we that. so it's doesn't that too on two we the impact not really like can our board.

in of them is it's Beyond them percentage increases relatively discontinue other that, And varying small, rest the of just degree, small. the that some will the small because so and pass other prices either beyond it will business the and through.

Josh Peters

this, impact insight I'm That's that you lot of to gun kind on of but cloud that very to that announced far, helpful. some through right would you At had least a have certain in with XX% terms every things get is of you sure suck scenario some to of could from we were that horizon the to up big recover case gets scenarios to applied think out import, game a tiny the now. have little countries. resource other a a Again, where while perhaps a pricing tariff if so gamed on of here, out trying or been just where you've I'm the you

Randall Chestnut

intent don't Well hope know. again, be don't there let on a and the first okay, pass coming and that's right, think but me it our not going in, we to you're is We it could case, case, either tariff is say, if that that's unilateral the I XX%. on. everything be But to

difficult prepared in but nevertheless looking to we on at products pass it's to products are we and other find have we at the - quite that to We if especially, countries candidly it for looking other countries to. we the other are but it so make, are textile compared countries, very

Operator

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

Randall Chestnut

on Andrea, for the thank in your thank and attending you you very much. everyone Company. for thank And to you interest the call, today,

thank if quarter. going the us. again Management shareholders, And quarter. you. in Have very we're speak future we close you continued like to the on. you bright and employees, But Thank we're next customers, If a challenging was a good day. their of a the and front of we'll Company look about numbers, have support. - that we we our you and We'd aside, excited We're think set for suppliers, QX future of to optimistic at all to what's as

Operator

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

now may disconnect. You

Crown Crafts (CRWS) 9 Aug 182019 Q1 Earnings call transcript