CRWS - Earnings call transcript Q2 2022

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Operator

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

Your host for today's call is Mr. Randall Chestnut, Chairman and Chief Executive Officer.

Joining Mr. will call the on be Ms. Chesnut President Elliott, and Chief Mr. and Officer; Operating Olivia President Officer. Chief Demarest, and Craig Vice Financial At this time, mode. all participants are in a listen-only we question-and-answer at a will instructions Later, follow will session that and time. conduct permitted this call Crown or is authorization Any reproduction without in written of prior Inc. in whole part not Crafts, from today's call being recorded as November XX, And conference a today, reminder, is XXXX. to over to At call this conference time, turn I the would like Mr. conference. Craig will Demarest, the begin who go ahead. Please

Craig Demarest

second quarter you, the Conference the Officer. Thank this and of Welcome Call me Company's With Operating Crown to Company's the telephone and President Officer; Chestnut, fiscal Investor Crafts of p.m. Central Time X, today Jamie. available web the Executive of by Also, and Olivia Randall February XXXX. Elliott, replay A Chief be replay www.crowncrafts.com. year Standard for are a hour website XXXX. accessed be will days call visiting for end XX one our available X:XX at will of can be this the on call through after the call Chief

Before That the we statements press will conference turn listeners I the of to contained over to in I'd regarding release. remind cautionary call. language the language made in forward-looking applies now comments today's like Randall. call same begin, to

Randall Chestnut

Good to We're Craig. fiscal XXXX the and happy of joining thanks conference with for for you, Thank afternoon quarter. call. our everyone, us second quarter the results

challenges quarter. warehouse new the California. In our notable the Compton, early August, during to confront system, management warehouse a several which we in of However, implemented we is did operations streamline part intended

the destroyed in were water Hurricane almost this leaked two-week the were time, took was end to system was offices our impacted the at also from Gonzales, closed. weeks into to homes delays associated and However, work for itself many building the void of Asia. impacted by were entirely. their a Louisiana during time several we're home, up of experiencing the we and Ida, from almost August, outages the get costs the and companies, challenge of with The was employees weeks other At were roof building, goods extra as storm. two it and same importation of Southeast most we experiencing have to office and close Louisiana, that Internet of shipments to they the which with period speed, of requiring Along us in significantly by here and power U.S.

we that wherever increases have these are than has Fortunately, better we contract us customers has rates We've been somewhat importers a during but tight. with also the to in can rates itself employees workforce, months. and that and other very our possibly We're to forwarder human retain along been higher passing We're hire the slightly somewhat with with Labor offset a Compton in quality warehouse our problematic. working operation freight our protected few to past getting. turnover resources has charges. experienced in

Turning the balance dividends. sheet to and

record share. stock Both a dividends, share Board these special to to payment a quarterly of the dividends $XX.X per of million we dividend paid of along that to usually strength pleased the repeating dividends. with have the will per of December Directors XXXX, XXXX. distributed yesterday's per $XX XX, dividend as equates shareholders will back Company's XXXX We're XX, December play Company common close cash million. with quarter, us $X.XX After began of of allows be annually, declared today A Series XXXX. per $X.XX Our of yield That on warrants business of share we distributed the to a paying on close price. have of X.X% of on the or the annualized $X.XX of based financial very these shareholders Since will we again we these pay itself. back that The almost to the since $X.XX dividends normal shareholders dividend in

Craig quarter over the anyone Olivia Thank questions we'll on turn it who to I'll end, and questions in may to the then more Now have take line. from discuss at you. details. the And

Olivia Elliott

Randall, good afternoon, I'm and on turn second go And touch to level. very at to the a more results you, he's then going Thank everybody. to going into I'll call over the high detail. and quarter Craig,

months again $XX.X year-to-date May both last sales six current period million for net both years of second Sassy. you with year. $XX.X quarter if $XX.X million quarters, million. been XXXX from $XX.X fiscal sales would Net But first compared operations have Carousel exclude ceased were million XXXX, sales Carousel compared which sales if would million and increase both NoJo with represents $XX.X with million been for the last include have of quarter an which Designs, the were once year you last from of net year. X.X% million year, And $XX.X for Second years, for compared in $XX.X

a starting in see due sales. to year, to to continue also XX% with sales of those our international represent sales shop shift almost of We've but sales. to this more sales continued X% consumers again, representing locations brick-and-mortar higher than We year-to-date in still sales Internet-based see

both Program the the net of $X.XX last year. quarters, per from period for years, Second last $X.X was been exclude and both the for have of exclude year. Paycheck $X.X $X.X been year you from forgiveness net or compared six impact compared million diluted When net income was compared year or from $X.XX both $X.X with share, diluted the million year. share of would Carousel $X.X first would income share per for six months have fiscal $X.X When quarter XXXX with with current year of with months income year. million the $X.XX the you per diluted last current million Protection impact million the of quarters, loan Net $X.XX last income this million compared the or year $X.X Carousel million

gross impacted to mentioned, rising quarter. impact we margin the of Randall As continued costs, feel this freight our which

side, $X.X balance no the quarter with cash and sheet debt. On we in finished million the

details. this to over Craig overall, I'm was for good turn quarter to it for going more So a very us. now

Craig Demarest

Thanks, Olivia. I'm to give financial highlights. going

detailed more a with the refer morning. analysis, Form to For filed the SEC this Company's XX-Q please

based which sales and the year the purchase below fabric effect two-month net new net quarter, in sales The million closure including by the sales the period of period. of current $X.X fiscal year extinguishment to period with prior million charges were includes $XXX,XXX the by for million The of second decreased $XXX,XXX due of with period quarter period Sales of from gain period quarter to expense effective from of decrease the compared $X.X on freight. prior current year, by closure cost the year. or year. in prior of due sales Marketing X.X%. first from a Carousel to Gross quarter. six-month the by six from lower and Carousel. gross current continuing same six-month of a for annual amounts $XXX,XXX of blankets, operations for million sales mentioned, supplier the sales XX% million year quarter. administrative six-month of lower six-month first in million profit primarily net the a period the the for in to of to for million second sales $XXX,XXX The decreased for to includes period of $XXX,XXX excluded of a sales of of accessories oceangoing $XXX,XXX The the retailer. in incurred of tax net year The decrease $X.X of included the with business. the the of has $XX.X year for $X.X same PPP taxable of quarter. current Carousel and settlement X%. Olivia the which of current of period three- of for decreased net prior XX.X% million will for X.X%. forgiveness Carousel's of of current also by sales $XX.X partially of by recognized liquidation the in the from decreased year-to-date higher in cost effective year, the in inventory The $XX.X As bedding of decreased is which the were items fiscal associated a decrease be of the $X.X recognition or This a XX% in $X.X prior year. million, current ended of bibs, XX.X% XX.X% sales be XX.X% the the net closure administrative in sales sales XXXX sale gross profit the $XX.X sales by increase to decreased from year. the and of the due upon profit are period fiscal impacted expenses increase the for the this expenses commitment resulted modular for year-to-date a six-month bedding, prior and during The offset to permitted and XXXX due periods no comparable XX.X% both replenishment the the and remaining sales the decrease in to tax quarter in $X.XXX taxes strong in of year XXXX include debt, of is closure was $X.X in year tax prior charges the by to bibs, closure an decrease blankets by gain Net increases includes provision the which and quarter Carousel and XX% and offset million the upon of in million in associated decreased in Designs decreased net decrease gross been of an of by expected adversely higher September The with million estimated rate included from effect $XXX,XXX toys six-month current six-month increases toys and continuing profit profit, compared Company's income with a for months Other decrease and period, the to an the Gross set disposables, income, XX.X% of $X.X orders provision with of the sales of current XX, by XXXX in profit same the $X rate the the year decreased of inventory year increase Carousel, for year and is major net approximately in in disposables. the net million partially gross and of compared million XX.X% and lower of prior of which year at a the loan. $XXX,XXX Marketing

the The current Company options. of year second and share year-to-date the income $X.XX for net the six with same the fiscal the for for as tax fiscal rate and well will in share XXXX XXXX. to benefits Net continuing tax tax of was exercise of stock or income to overall shortfalls Net $X.X stock the or or months the unrecognized over prior or non-vested and combined the quarter I diluted effective six-month per items, million diluted the of provision for the of taxes for now $X.X for XX.X% entries fiscal or second diluted prior diluted discrete income from income $X.X million During quarter net the $X.XX the to income liabilities XXXX million million of back call tax period, an as compared period of resulted compared arising per reserves associated fiscal turn in of discrete $X.XX for share recorded operations, Randall. first $X.XX the vesting excess of income from year. effect with XXXX. XX.X% for current period per per $X.X was share

Randall Chestnut

Olivia, open Jamie, very much. come you on, who to ask call. thank anyone you it that's Craig, on may the we'll up if And back questions

Operator

from question our today with Bolton-Weiser go Linda And from D.A. Please ahead question. first Instructions] your Davidson. comes [Operator

Linda Bolton-Weiser

hurricane the to I'm all the about with sorry impact. issues hear

now been fixed the in the from repaired So have your do terms you it damage? Has building of hurricanes?

Randall Chestnut

Not entirely.

area and earlier, labor, a said leak temporary off with part, us back but very it's do literally not I As one has has an a the the still all has the And hurricane on the building. building. of landlord material roof been fortunately affects ripped in it the able Linda, put roof all much. the And shortages over to that

everybody So to back permanent a back we've don't on we have but work, got building. the challenge. It's roof still been a

Linda Bolton-Weiser

Right.

now? issue. Storm, so -- level late, a back of to you describing the So And little that completely a -- you your got now? is normalized on in are I terms I warehouse heard shipping is resolved

Randall Chestnut

It And planned, to to week over and We or take convert do. over in hurricane which void two, were it two always is. literally we August. took to an the Linda, the a month for -- little two came. It little it. almost that. almost and It It's a then weeks hiccup we in slight system you took a had the inventory a put later, resolved. of take had weeks, two of weeks shipments And

all So we doing yes, we bit took properly. month. system. it get But a working It had good the well it in. planned a in just It's to had a it's and is great it's longer system get little operating, and than

Linda Bolton-Weiser

that issue? any there quantify Is way in the from Right. sales quarter loss the to

Randall Chestnut

back next September. because difficult to comes in Linda, that's a the it lot in of month very do

difficult I did retailers orders and mean it's we canceled we some know quantify. some And didn't reorder. lose so that because just to business

Linda Bolton-Weiser

initiatives of doing competitors pretty recover terms in much mean Or of you thing try same of And Okay. think any cost the are your how risk competitors your losing some to reacting? pricing? with do space? inflation, shelf are pricing there's to some I

Randall Chestnut

-- run business, our pass I'm it our but going it mean do a run got XX-year right we make The inflation And out shareholders. for the sorry. will that And what may the business, we We this and We morning We an lose we're of month -- very we've that's of for I to but since what's minor. for October, bit And own the -- decisions. own do we cost to was Linda, that. XXXX have business. high we're came in since on. do. and said article and Company at that own hopes a XXXX, the little be Well, to highest our

never before. we've So we're like facing seen inflation

pass have to We it on.

Linda Bolton-Weiser

course. of Yes,

are terms problems in to but on delayed? it able is get So color give getting Is having Or that you experiencing? your more are shipping? getting you in a that? container are exactly to little containers? access containers everything what can getting product you're Or of from So the Asia, literally just you you

Randall Chestnut

fortunate, Linda. bit little a We're

that they We containers ship Long have a effect, in shipper we with containers contract terminal area bring and they the have in in a to the they major own their Beach steamboat and break have that it. where

bit We've our we've shipper we that had to China, this a Long we've to little that Southern and haven't Beach them. floating -- and doesn't port. lot handle come that a number of goods had the fortunate. been going also we've Southern the backup So, I'm and Ocean because China. around had not particularly say Pacific the a trying products, products from But of particular get toy into

it in to we from out boat China. and We're so we're Hong to cost get get Shanghai, coming freight on area, count So instead that ship we in cost trucking us, the the shipper to out shipper it up extra actually protect rates. ship get that a to the helps Kong of we're worth China a of goods of the use this it goods But our et reliable having pay goods it it's because to that can Shanghai around risking with inland the also particular and Southern on get and -- will the on which can we the cetera. trucking Guangzhou, area, Kong area, Hong we

is not more. that we're in And for lot boat. only different the everybody. of things. costing it So a net-net-net, is We're But doing it one

Linda Bolton-Weiser

okay. Right,

you were of of cost kind then kind inflation? cost and are things see So stopping in some are getting terms general you would Or terms in say that things up stabilizing, worse? like going the that inflation, of in of

Randall Chestnut

we've put hard, be and it's difficult, they're we're Linda, that were way, it know, let's some some to of and better decisions And made very a a statement. forward-looking hell forward-looking would the of doing later. not been made. we you statements lot probably up we're try because But that doing, people to fighting And we we than it make as live of a hard think because well every to of moves the day. of candidly,

Linda Bolton-Weiser

you comment would it demand? terms of you your demand the in then still things that okay. on side quickly? retail? fairly Or movement Right, POS can of the And strong products off and maybe for how case? just demand Is moving at like shelf pretty your characterize the are Is

Olivia Elliott

very strong. is Demand

and stable, is the on is shelf POS moving. our very So what's

Linda Bolton-Weiser

Okay.

Randall Chestnut

We monitor don't our XX% we some the and of of it's because of the the but reports business, it, major retailers. weekly everyone weekly see before. major them get POS on with basis, our XX% for week all of Not a have our -- Linda, POS

Linda Bolton-Weiser

sounds for and thank you I with That good. good Well, had all I now. But answering for my that's luck question think everything.

Olivia Elliott

Thank you, Linda.

Randall Chestnut

Appreciate it. Thank day. good Thank you, Linda. you. a Have

Operator

from And our Ralph question Instructions] with [Operator from next First comes Company. ahead question. Please your go Manhattan Marash

Randall Chestnut

last you? than butchered are your we how name. other But that, Ralph,

Ralph Marash

we will myself help go. take too. If mute, There I off that

So I'm are soon. really hope hurricane rest -- hurricane many of get of you, issues glad and the I that out much behind that of the straightened them the

Just questions. two financial

of of that seemed is the high first The at end the kind quarter. inventory

Randall Chestnut

Ocean, I'll all thing good at floating we a right pretty With Actually, goods. but least They damn the up, that got now. around one. are that's stuff the put Pacific

And was be of be high. going we couple up bit in And for in. weren't everything containers we that they bulked we so because yes, a bringing were little we got are part to to had And sure we we weeks. because a of knew down wanted

not but high, we're it's a inventories two-week shipping that a during bit not where so it's -- Now are problematic. little period,

Ralph Marash

second question... good. And advertising the Thank that question very you. That's is

Randall Chestnut

lower have prices that part we -- at of bought these buy on to were other than that we'd the today. goods is Yes,

Ralph Marash

on helpful all That's counts.

was The this second advertising lower seemed question quarter. that much spending

Olivia Elliott

That's of to was a direct result direct Carousel. consumer. It

consumer to direct driven advertising. is highly So by

Ralph Marash

much. Thanks Great. very

Olivia Elliott

Ralph. you, Thank

Randall Chestnut

you, Thank Ralph.

Operator

is today. final remarks. turn over to I'd like question to gentlemen, And our the any ladies and floor closing back that management team the for

Randall Chestnut

thanks today. quarter. employees, this outstanding the repeat, our when Jamie. their mid-February to our through release I everyone in good continued everyone very the thank today. we're you of an to suppliers Company the third for our you posted results all again is all call We quarter And who Management for with much. of a for and we job and interest working done proud for to talking and like Okay, that, of support conclude on the has quarter. I'd Thank Again, challenges look and extremely of you earnings. in for thanks forward the the we'll attending. special With thank results conference customers. call

Operator

Ladies presentation. today's joining. and thank for you does conclude that gentlemen, do We

disconnect may You lines. now your

Crown Crafts (CRWS) 10 Nov 212022 Q2 Earnings call transcript