CRWS - Earnings call transcript Q1 2021

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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. [Operator Instructions] Any reproduction of this call, in whole or in part is not permitted without prior written authorization from Crown Crafts, Inc. this being reminder, XX, today, a XXXX. as conference recorded is August And I to now over this would At time, like to turn Ms. call the the Olivia Vice President CFO, will Elliott, and begin who call. ahead. go Please

Olivia Elliott

welcome Chief Thank you. call the Executive Chestnut, me Officer. quarter first the the With Crafts fiscal XXXX. is investor for year to of today Good conference Crown company’s and afternoon Randall President and

Randall Chestnut

Good afternoon.

Olivia Elliott

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

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

Randall Chestnut

everyone conference time on interest. call. today’s We Thank your you, and Olivia welcome appreciate to and

then XXXX the will or brief was will Net quarter you $XX.XXX give the quarter, little our details. sales released we going results opposed versus and million and for same overview to or Before of for you a per an year quarter this Olivia $XX.XXX which discuss this our the first the $X.XX of morning, period million $X.XXX X.X%. million quarter year are last $XXX,XXX increase of opened last ended year same quarter or through brief it in million, XX.X%. XX, year as last Net income to of June were we this year. the for of increase more $XXX,XXX share first and or was same $X.XX Diluted a take earnings I the opposed earnings market as an $X.XXX to year this

As the we we began of were the pandemic. the at quarter, height corona-XX

nicely. business, internet e-commerce our and both very grew retailers quarter, the During through direct-to-consumer

to ship closed. set has As we period reported, direct-to-consumer. this California, able to warehouse retailers. brick-and-mortar retailers for majority during And were Compton, the actually previously have We drop well us we very do in be many our served this this up as our of

have seen a in consumer products. We demand our big for increase

has of to payment Due and shareholders stock which once to the price, Olivia. ability closing of XXXX. the control announced dividend tight press this proves that, to share, paid performance company’s of cash over our September react continue and again the has market our that to record will of quarterly morning, a the always, $X.XX swiftly company’s declared that Board cost to strong of turn X.X%. yield of also per to financial X, return October value be Board I Series common As dividends as A on as the Based of this maintain annualized represents appropriate In With an to of shareholders. release an close we business the on yesterday’s will Directors changing it the XX, company’s Directors of we it position, to the on decided resume XXXX conditions.

Olivia Elliott

Thank highlights. give financial you. only am I going to

based mix decreased higher rate of through the were Marketing tax cost offset outside toys primarily income prior sales higher higher year, in of operations for and blankets by of by quarter. due sales of net the in and the current increase upon quarter. annual Securities in to the in $XXX,XXX increase the refer the analysis, sales quarter at estimated compared for bedding in due please current of as administrative XX-Q to of morning. year net net of result Form XX% of increase detailed first Exchange year to The XX.X% $XXX,XXX, profit to the primarily sales period bibs, amount and XX.X% decrease the retailers well year. prior year filed as from the company’s Net million quarter product is of services lower The sales overall in of major net from is sell lower with and with offset disposables. is the by year. XX.X% compared for partially compared year the increased The an current prior quarter compensation current amount XX.X% fiscal XX.X% effective prior XXXX million for sales year amount sales $XXX,XXX, $XX.X more sales $XX.X primarily expenses current an customer for The in slightly for of of Commission provision with and is continuing the an first with in Gross of and favorable taxes the increase X.X%. the year For $XX,XXX. more a this or were

benefit the income for liabilities company recorded unrecognized that During reserves a through the had it of resulted recognition for year the XXXX, reversed $XXX,XXX. previously quarter, years tax XXXX which in fiscal discrete the tax prior of

excess which during effect in charges the rate provision liability. tax resulted or income of Net was unrecognized benefits from $X.X the million, combined million income income the XX.X% year the $X.X continuing of quarter fiscal overall the these for of non-vested Net The and X% first of XXXX discrete recorded fiscal included or the income discrete $X.XX for And quarter of income prior addition, current vesting to the with with tax company quarters, $X.XX penalties. first tax taxes effective and was will an call tax in diluted tax period discrete benefit both per Randall. XXXX with stock the the now $X.XX and charges associated for operations the entries back benefits year. the In reversal I for recorded also give for of or share associated during associated from year interest reserves diluted arising current share, per for and prior the and the

Randall Chestnut

very up anyone the on Olivia, come will And you will back we might Chad, have. any questions thank Okay. to it that you if open much. on, line

Operator

you, Thank Certainly. sir.

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

Linda Bolton-Weiser

are how Hi, you?

Randall Chestnut

Hey, Linda.

good. you? are How are We

Linda Bolton-Weiser

Good, good.

So, good quarter. Congratulations.

Randall Chestnut

you. Thank

Linda Bolton-Weiser

seeing results segment up I I was was accessories about wondering bibs, etcetera, whereas was the at and blankets looking XX%. bedding – was XX%, the and down

of or that unusual performance? terms with or regard So that timing like to certain there other shipments so orders on going in made the that, one segment anything of anything is different from

Randall Chestnut

was give following and inside has we Chipotle and and and Yes, going their they restaurants they when inside we a closed. with out visit, on bath the go There the from they Linda, one, restaurants. for been a segment, have to placemat closed that the the you business saw were kids, their for was segment. their on the nice Sassy couple know that And a restaurants while, sales, as us bib very there in depressed of things

make goods been have our therefore has face quarter. So sales fixed Bibsters, had to has they for other that use make material business. not segment during the finding bib which the that we hard And this the masks. that we is been China, And now in depressed ordering our diverted the That which disposable got a to time of is material. one material

or substitute say order now September. and a found have should material have going we we back late on am to since probably to shipping, and We be I goods August

Linda Bolton-Weiser

XX% Okay, on is that in bedding, then of the e-commerce there? thanks the explanation. for special or the anything there the strength going And DTC just is and that growth

Randall Chestnut

we and own we much competitors up. own also destiny when our years our of But and to websites, warehouses who I XPLs, did the going or – control we a is was third-party been we outsourcing that a XXX facility retailers attributable of and movement then our that’s that which said Designs XXXX. to our was in we with there go their was resisted to number within to Linda, and direct-to-consumer Compton, as setup ago our California, to now since And have appreciably. piece, XXX% said going which are Carousel drop-ship pretty and many we no, up a e-commerce business the in have earlier,

the us ship So, to we flexibility that direct-to-consumer. have and the gave flexibility

and e-tailers can so So, have we to set place it the we capability drop-ship. orders the up,

influences. biggest the of one the was that So

Linda Bolton-Weiser

Okay.

something that you sounds benefit. continues be maybe it continue will to e-commerce So to the continue like can that Is that’s extent to strong correct? that

Randall Chestnut

try you does drop-shipping, forward-looking assure that shutdown line – a that we okay. going that Well, to not statement. I that’s mean, again the But can you are rest

Linda Bolton-Weiser

is Okay. maybe that you the SG&A at than is have And and are cost look control did that cost-cutting frequently would how million did of is unusual you bit thought, do you then you marketing and think it if while advertising, I good expenses, was you know noted like it exclude admin the a some little expense? $X.X a sustainable I sustainable what or level about lower or that

Randall Chestnut

future. the that that, is think We for sustainable

Linda Bolton-Weiser

you think got that Okay. of what’s $X then, timing that And had repayment a of you million something that the PPP to talked that Is about have I payback and loan. you that?

Randall Chestnut

to for the this up forgiveness they SBA our timing lender Well, is right but up us now. for bit Monday open that portal it. announced opened applications uncertain not has a little receive of The file to their were to week, going Linda,

once they if are decide can forgive we to it think days, a and not it If okay. then do require they require start ready. until going to it get next at days has were it don’t look to bank it are or repayment, repayment. XX XX SBA is We if I to and early or going we has they then Then SBA submitted year. a to the We file,

Linda Bolton-Weiser

it off they be paid would if So, gradually. require repayment,

Randall Chestnut

It over yes. paid off months, would XX be

Linda Bolton-Weiser

Okay.

Randall Chestnut

would that the start sometime the after not year until based and on of first But days days. XX the XX

and then the could an get submits if it sooner. it answer Now, that start. if denies does the be and sooner or We theirs work sooner to their than sooner and would does the SBA bank it approves requirement could that be

Linda Bolton-Weiser

And you it be leave loan or? Okay. for cash if would use any forgiven, or special sheet – the that there on balance the just if was

Randall Chestnut

Well, it balance Linda. would stay sheet, on the

Linda Bolton-Weiser

Okay.

Randall Chestnut

applied We have did We that. the that of okay, loan, keep used agreed whenever the that XX-day because the I we everybody employed XXX% we SBA did money, would period for through we and the we pandemic mean.

for. used that’s kept and so And of what the the was everybody we portion employed biggest money

Linda Bolton-Weiser

then margin ask Was gross that? And favorable good mix can in mentioned was you you the you or I okay. you, there can was Right, quarter, what product a can just more mix channel color give little your repeat on that that? quite was or performance mix, that mix

Randall Chestnut

slightly or the channel they It’s blending T.J. both Marshalls, more a historical mixing, okay, customers, the Morning any major not some product closed shifted channel Ross of closeout Maxx, Tuesday favorable closeouts than the okay. mix Stores, most were the quarter, taking to the so and HomeGoods, were margin during of

has margin as that our a way So, well. improving of

Linda Bolton-Weiser

big license, Okay, that you and license that is calendar how the Disney that that end I a one read significant is at got expiring finally, is it. maybe the that correct then we XXXX, And year of one? think have

Randall Chestnut

I right it’s don’t renewed. there of a you in not I is it’s being information of think Linda, front not in expiring, but are huge and but one not danger that me, have one right

Linda Bolton-Weiser

that looking margin one since margin In Is we anything And someday a anything is on is margins that be had in am margin then, not unachievable years changed tariff structurally ago more if ask you there mean, level timeframe future? can I well, in have of I Okay. FY could. has about a then that over but I the couple structure future ‘XX. at the it, peak in would me have operating did achievable I guess XX.X% time, but let a just of that’s that that putting the any make there changed? your

Randall Chestnut

have of asking a information share are will one revenue. Babies"R"Us lost the that probably going helped basis. we was Linda, thing promotion all as us that again at ultimately before you well you on margin mean, The again and it the the into that The gross we required a not said very business, hard margin bankruptcy account know we is information, it of lowest out I say and but to had. which improve we good bad advertising effect bad hate to say But forward-looking for effect our liquidation that this going this, because I has try good and effect. forward-looking I account, was and and

has had on margin a our So, going that gross forward. spin positive

Linda Bolton-Weiser

very very that’s Randall. Okay, helpful, much. Thank you

Randall Chestnut

welcome. are You Thank quite Linda. you,

Olivia Elliott

Thank you.

Operator

Michael [Operator Instructions] come will And Bernstein the with [indiscernible]. from go next ahead. question Please

Unidentified Analyst

quarter. great Hey,

Randall Chestnut

Michael. Hi,

Unidentified Analyst

are Hi, you? how

Randall Chestnut

We are good. How are you?

Unidentified Analyst

locked your up. event, balance is in question on the home, carried But the PPP loan At any sheet? how

Olivia Elliott

Until granted forgiveness, we we until it’s are as – are granted either carried debt.

a of debt there current line. piece a then piece in the So in is there maturities it the is long-term and bigger

Unidentified Analyst

highly Okay. be that And or income? portion which if become will likely that will a it’s be, it it’s forgiven, large will

Olivia Elliott

a gain. It will. be operating income. be would It would It below

Unidentified Analyst

that of loan a the million? little was And Okay. over $X size

Randall Chestnut

change. No, million, little under $X and million $X.X a

Unidentified Analyst

factor. Thank very X% my much. within that’s Okay, you error

Randall Chestnut

you. are welcome. You Thank quite

Operator

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

Randall Chestnut

very these think very in much. we thank I a time, I proud your was we like would you that and suppliers has our it. good quarter. months this support of has solid phenomenal fiscal very are prospered are it��s past employees, all customers, very Crown that. And And everybody like you of and shareholders day. for quarter company well but to interest very And continued thank and ‘XX accomplishment. through would difficult we Have a FY their proud much. been X a Crafts. again, to remind Thank Chad, QX of a done and

Operator

has Thank you concluded. conference attending The now for sir. you, presentation. thank today’s And

now may disconnect. You

Crown Crafts (CRWS) 12 Aug 202021 Q1 Earnings call transcript