CRWS - Earnings call transcript Q3 2020

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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. Later, we will conduct a question-and-answer session and instructions will follow at that time. call, prior or Crafts, written this not part, Inc. of without permitted authorization reproduction in in whole is Any from Crown February And being this reminder, XX, today, as XXXX. conference a recorded is

would now Olivia the Ms. President call. At this go Vice time, like turn over Elliott, will the who CFO, ahead. to and Please to call begin I

Olivia Elliott

the Chief With Investor Third Quarter the Officer. you. Thank me is Call today Conference Welcome and to the for Company's Randall Chestnut, Fiscal Executive Crown XXXX. President Crafts of

Randall Chestnut

Good afternoon everyone.

Olivia Elliott

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

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

now will I the to call turn over Randall.

Randall Chestnut

again. Olivia, and thank you good afternoon

I a information December for third open the quarter. quarter morning, earnings address that this ended little and XX XXXX, market the our the we our announced about of Before will

an call. which from in $XX.X net or the million, $X.XX a for or share sales address or bit there from later of year-to-date increase Diluted slightly $XX.X $X.XX year. numbers income million up the share year share at just million, little year earnings Olivia last million quarter last last $X,XXX but Net were down $X,XXX per of the were per per $XXX,XXX, XX.X%. will and were

third that we post performance. profit Net increased spite and the call for research the quarter year our address improved very by sales, net will for quarter In and able well. of having net this to Gross of aided was flat in to credit of We're tax as later income versus proud a sizable year. income. quarter gain same Olivia XX.X% activity sales last were XX.X%

China. by tariffs For the on last goods challenged few to were took these. address We the particular actions that we months, the from coming imposed been have numerous Asia of issues out

an of were ones, a of we product toppers, we One excluded that and fortunate from the tariffs. is table get granted the were our products to disposable exclusion on which one called

We've we some better with our also from the our exchange suppliers. and prices favorable worked got more rate suppliers became as of

we we behind now where increases price we can our and this passed addition customers. us forward. In onto Hopefully, could, issue is move

just Asia. still have that on outbreak we're issue other coronavirus now One Chinese of to New point, are returned the and coming occurs out with determine address closely. that too Year very during the escalation work. the The that coronavirus this We're I'll briefly. monitoring and early the the our factories to At effect will is it's deliveries of that dealing

of that $X.XX XX, per the declared In Board $XX.X common press Directors morning, cash the cash of million On availability revolver the the had of end the the of Series this as and off we of balance A strong had of was sheet December dividend revolver a announced quarterly share. we the side, quarter, paid balance had that XXXX. had we at Company's we and and release small stock we remained a a on

X, their offer April and ongoing shareholders pleased of dividend value our yield Company's closed we're XX, to represents commitment of paid March again, Based close to X.X%.The confidence Once on price stock, this annualized on the as an of of XXXX. this to to yesterday's dividend business XXXX shareholders. reflects provide business of that record the the in board's on will the

back to Olivia additional it you. Thank give I'll for comments.

Olivia Elliott

only I'm filed financial more the morning. please detailed Exchange get to and Securities going Company refer the form highlights to analysis, this XX-Q from with Commission

of X.X%. were prior nine the year, $XX.X months million Net sales with of of year, million million for $XX.X of X.X%. of the with the XXXX, decrease a of third million a period same or were or million for $XX.X the compared slight prior for the quarter $XX.X Net quarter third sales fiscal the for decrease first fiscal compared XXXX $XX,XXX $X.X

of the staff current current $XXX,XXX year. in as retailers year. and in bath, as was certain sales The primarily to of the decrease due of quarter well decrease bedding, discontinued increased in second disposable the toys, by program bibs, sales timing million by baby to blankets shipments during the while was year, care and a products that developmental $X.X current accessories Sales of feeding,

Gross profit the to profit of quarter increase the year XX.X% prior net in prior of quarter. the year-to-date a for sales increased period net an $XXX,XXX, by XX.X% of net for sales $XXX,XXX, to current XX% for for net from sales for of quarter the year an year Gross increase sales increased XX.X% year. the current by from the

year. from were decrease prior the the in administrative of Year-to-date and expenses quarter $X.X sales expenses and current for of flat quarter. XX.X% XX.X% in XX.X% net prior sales XX% million $XXX,XXX decreased net year in amount to by the and the quarter for to marketing decreased net slightly year from sales Marketing current of sales for and net of administrative the at

to year. Rapids, in to California, in the current an compared XX.X% the Compton, Sassy operations decreased income Michigan, to rate facility is transfer in distribution based provision expenses by upon effective in Current $XXX,XXX tax XX.X% estimated Company's inventory addition, year year continuing services the from the The outside prior year. included in current Grand of taxes annual for for $XXX,XXX

reversed During discrete for the benefit the $XXX,XXX. the the recorded liabilities that of first current for tax unrecognized in previously tax year, which XXXX, through year had income XXXX quarter reserves of fiscal recognition Company the resulted of

of During discrete a certain $XXX,XXX the benefit current of to credits. effects the quarter the reflect Company of year, recorded income tax the tax aggregate third

In the both divesting entries stock non-vested year the liability. and Company recorded current quarter and reserves period tax addition, recorded during of from prior with year-to-date, or discrete year arising and unrecognized excess associated for the tax benefits charges during also

of rate provision tax the for the year for the with operations for the and effective and income of an taxes The XX.X% resulted discrete current overall continuing in XX% effect benefits charges tax from combined prior year. income

the consolidated the for California ended fiscal close other income tax XXXX, of to became end or March the the Company's to return adjustments. year Subsequent XX, quarter, examination

unrecognized fourth Accordingly, result benefit of $XXX,XXX in tax reverse for quarter, quarter. year, intends which reserve will for liability the to during the fourth the the that income in the recognition of fiscal the a tax Company discreet

to reverse related expense also fourth interest and intends of penalties, in Company quarter. credit result during The to the of accumulated the interest which will recognition $XX,XXX accrued a the

same months $X.XX from share, nine million per of in million per Net for $X.XX of $X.X share, the third quarter up income the per of XXXX up of for period $X.X fiscal Net for for net first diluted diluted per XXXX. fiscal fiscal or diluted or was share million XXXX. quarter income income income fiscal the of the third diluted net million $X.XX $X XXXX was or from or share $X.X $X.XX

to give I'll And now the Randall. call back

Randall Chestnut

and Olivia, Jerry, have come you call in for on that much, to the very thank questions you line. and any I'll it back open may anyone

Operator

The [Operator first session. will Instruction] begin Davidson. D.A. Bolton-Weiser with question ahead. the now question-and-answer go We from Linda is Please

Linda Bolton-Weiser

the really has it that going is good like could a fourth the this -- the reversal year fiscal looks doing be year. year performance again this margin Or it forward? for and you So, in level your depending fiscal some there good something XX% quarter. or quarter, sustainable gross Is been you of that you all how your higher in is margin roughly It the think on even was for level gross this foresee? -- is

Randall Chestnut

and thanks a going try forward-looking assumption for get but very you're Hi, question Linda, that's my the statements. hard like to to not forward-looking and not we answer,

And that. say so back going that we therefore, and to off I'm can't answer

Linda Bolton-Weiser

cost mean, the your explanation gross you've really Is particular performance? good you've that the But that measures for have talked margin. about, helped Okay. done some I reduction

Randall Chestnut

and Linda, that said repeatedly years it. is do over we've It don't the that we

tariffs, maintain good, year-round, help to cost type the that. do and it an even ongoing few we margin. with do critical was controls when past more these we on are that And times we And gross during that protect Just months does that basis. our

and use reducing the And act balancing so, offset for increased we a China, to prices prices of to customer, tariff increases. the tried of

good a to able land the out that the with with quarter. come fact were pleased mines we're So, maneuver and through we

Linda Bolton-Weiser

a And some that for And like, you used coronavirus then, use you or do situation are little the they the all to still use? specifics already? just China. that back factory? you of in back make thanks going those plants numbers how to terms of your of have have are Or Can numerous out products, XX of XXX? the are plants about to the more Like, work gone work different in talking outsourced give

Randall Chestnut

or give rule comes I'll XX XX% count use, our the We volume the goes, we numerous. the today. or you don't of But XX% so. just of Linda. I that as Yes, information know, factories as is of know out

workers the they in and those go So, province into live located, factories factory come the where we the that straight the to if work. can know factors, the back work and of do start

back of We that do factories some people a that know have few work. our

And provinces We for to then government come be also they in in local they days. other dormitories the neighboring quarantine quarantine provinces, work, or XX into can which that it they if can government the in hotels or that provides to they trying are requires go as local for know be in China them. the that live either and back

So with bag. mixed a that it's said,

XX working have they have and or so. a have that that weekend now another and factories people quarantine, factories week quarantine should in have the back. we We be about to They're they're day people

to mean, to hoping want So, we're they they and work. go work. to back I need

a daily. watching we're So,

many rotating Our open. work And not business. for Shanghai out. is we're it and is letting so. and we're own or bringing some that We're very and of open taking rotating eight people We're home We're staff office in, in from them careful. there all in

office big people. a in has a of working lot which building, they're So,

not trying we're to So, overexpose.

we're get hopes is So, hope. to that under starting We control. in this thing

Linda Bolton-Weiser

good you. That's Thank very a explanation.

Randall Chestnut

so. can That's you give about I

Linda Bolton-Weiser

about Yes, helpful. I continued dividend. pay mean, you performance? your just solid pretty you. can cash flow I been you've very And and to thank no, ask That's your it's

quarter. year-to-date, Although down usually the million cash couple fourth it's in a negative your is and operating flow

Or quarter? to you to going have fourth you back pay a I'm exactly little flow? how balance So, your dividend to that the cash might put more is sheet are with -- work thinking debt in kind the that of on the

Randall Chestnut

Again, because degree, looking that's degree special I a a end by the we'll answer. a to but We but quarter, answer, forward have dividend. not that we big slight revolver, an fourth the I think statement, too be of the Linda deserves paid that give you to because on will to think the it

in was mind, was actually keep fourth the the paid at not quarter. It dividend special quarter. the Now the third on of beginning

So, we the the flow were out QX, cash quarter didn't come now. in numbers of line until

an And close the any money. answer both It the have we'll back be worry. worse Don't not for we amount of your a to limit. think, but in large stretching to revolver, to so, question, won't go for amount

Linda Bolton-Weiser

for it what would And Thank that's questions you really guess right it. now. a you that. for Okay. look we'll in you. all like my be appreciate I few so thank weeks. of I Yes, there see

Operator

ahead. is next Marash from The question Please Instruction] go with First Ralph [Operator Manhattan.

Ralph Marash

I for basis of is questions. spend Couple good advertising the down a a the Great. amount. on noticed percentage year and

have you an if that? for curious, Just explanation

Olivia Elliott

our It's main so ebb mean, advertising and flow. and with we think. that timing, have I that's I on just business is the direct-to-consumer

Ralph Marash

And Okay. inventories higher the year-over-year.

Randall Chestnut

combination, a Ralph. That's

was to increased you One not of it but tariff we're did it it them item items have December as know purchase -- effect, XX. tariff certain obviously, go stale. on into was go we doesn't the effective an inventory that extra that that But expected increase

inventory. inventory purchased all and for New spending extra goodness little earlier, it, we're got well. thank Chinese as so I'm now. of New a but anticipation Plus Chinese got and our bit good purchase we came Year right we sure glad inventory Year we've we So, of did

items contribute inquiry. two the --those that's inventory So, to

Ralph Marash

saying was that On follow-up explanation. for margin, about Linda little the maybe a Thanks what margins. gross on

dislocation the and fact company that conceivable to explanation are gains? shades from green tariffs is some your the and Is selling you'll give of you your price and follow it of and they understand anticipation the back have customers your obviously So, pencils a eye some they on. sharp profitability public and that and so have that

Randall Chestnut

is. customer mean, -- get already we've the short we price Ralph, of answer cetera. to I done Well, have to tariffs major with to think delay increases, some et We the every the negotiate and postpone

the majors, struck them. all of with with So we a deal

to not worms, Ralph, open and the say, that's now. they come Now, don't can don't -- but can back right we it foresee I of

Ralph Marash

part you. and my to pester do I'll Okay. them encourage not

Randall Chestnut

please Yes, do.

Ralph Marash

to me. listen That's Thanks. always it. They

Olivia Elliott

Ralph. Thanks,

Randall Chestnut

Thank you, Ralph. Appreciate it.

Operator

is Tony next Equity from go The with question ahead. Investors. Chiarenza Key Please

Tony Chiarenza

Good afternoon. hope you're I well. both doing

Randall Chestnut

Hey, we're fine. doing Tony, Thank you.

Tony Chiarenza

whether because bit see or it's is. been demand et you you of economy, things a whether helpful. kind kind things conditions it's right cetera? the better do as Can would stable? question see be or what little perspective look My slowing of little That about on corona me bit now give a Or down of you concerned just them like,

Randall Chestnut

Tony, it's in down. of and I stable more the it line than is that say would up being

As in they plus not Olivia websites. we loss one that retailers, long that suffered we But, they got as customers we repeated had quarter, sell store the alluded program as had coming to third to, promotions certain the the or discontinued last had that their year that were we into was of. retailers at

say So is more state a than up I it or would it's down. right now, steady of

Tony Chiarenza

Okay.

see slowdown a of like or bottom recession and see So, any you don't you is or do neither basically evidence the that, line? anything boom a a

Randall Chestnut

no. point, this at don't We

Tony Chiarenza

answer. Okay. for That's your thank you very helpful. I

Randall Chestnut

You're quite welcome.

Operator

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

Randall Chestnut

be reminder right, Thank will questions. call ending a mid-June, very for we the thanks you Olivia. that FY end you. will so March conference All And Jerry. which year-end much, fiscal next a are call will our be year, fiscal the we on Thank and which everybody -- And 'XX for our

Olivia Elliott

'XX. Fiscal

Randall Chestnut

in sorry. March 'XX. Fiscal of which 'XX, I will Fiscal 'XX. the Anyway, in I already this year. am be am provide will it end

So, again speak you to we'll that at time.

year-to-date performance are very periods. quarter the of proud and We of the

have encouraged of followed it. the We some and through very we're by challenges

with continued We'd year-end. suppliers, like to to our employees, of afternoon. and our And for we shareholders much. speaking you And look you forward Thank have customers support. we all thank after a their good very close

Operator

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

disconnect. now may You

Crown Crafts (CRWS) 12 Feb 202020 Q3 Earnings call transcript