CRWS - Earnings call transcript Q4 2022

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Operator

Good afternoon, everyone, and welcome to the Crown Crafts, Inc. Fourth Quarter Fiscal Year 2022 Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Craig Demarest, Chief Financial Officer. Sir, please go ahead.

Craig Demarest

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

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

Olivia Elliott

you, and management start Randall Crafts Chestnut Thank part joining quarter full for fiscal serving you on his year of as by our congratulating retirement Call. a and Chairman Crown Good and to of Craig. since after and company XXXX CEO with thank strength want since Randall leaves The fourth Board us years, personally for did as and member the Conference team XXXX, afternoon, I for that had privilege the all thank of ongoing I to well. for me the legacy that company working over like of of is tribute for and XX the behind. and the him XXXX. for Randall a to I'd as he our

fiscal $XX.X year. year. million million $XX.X Turning million. Fourth fourth last last exclude year net from for no prior-year $XX.X were with compared $XX.X been sales ceased But in quarter, quarter would you if to operations million Designs, results. in sales $XX.X fourth million sales were which quarter of have compared XXXX were There fourth XXXX. sales of current the Carousel quarter quarter May Carousel of with Net the

sales NoJo million of current with Sassy. If represents for Carousel would year, been $XX.X net compared last and increase XX.X% years, you year for $XX.X million have the which from both exclude an

million this happy the quarters. of China happy warehouse due damage sales to that shop higher a we've million diluted of also for the and When lockdowns again, exclude recovering also net Compton system shift sales discussing was water brick-and-mortar to locations the Internet-based $X.X Hurricane headwinds continue to entire from sales. been net in impact in year. Net also but California in XX% quarters, in Prior an last to been of gain continued international million consumers $X We're million Fourth has loan. results Carousel or both management warehouse year We million made Thankfully, would income from some see $X.XX with diluted implementation per forgiveness the from Paycheck quarter are year per diluted We're signs income $X.X year. and after-tax charge last or share related been last containerships $X.X of year compared those per XXXX million We're or compared million year. with quarter with year. our almost prior was for $X.X would current We've quarter the million with starting of year represent you share to last with $X.XX one the to have lift Carousel see year have Current current the seeing us. you $X.XX still representing this the compared somewhat. of Protection of years, net current current $X.XX per $X sales to Ida, almost X.X% and included receded beginning are assets. year. progress both $X.X very the the fourth have year share the impact million net $XXX,XXX Carousel bottleneck $X in share impairment for of results sales. with compared income quarter for from year or diluted that $X the and year fiscal When income in the behind from this included the of Program forgiveness include income sales of

we're So continue experienced our the see costs can. now chain, aren't and delays throughout we as what pass these costs along increased to that seeing We XXXX. we whenever as customers do, fiscal bad supply throughout however, increased we to the

and cash on and questions. will represents our May XX, detail, to balance based line XXXX. in discuss record June of strength quarter XXXX, to will on yield dividend share some come be the on of per company's on at paid closing dividend. continue yesterday's revolving credit. Craig Directors the price. fiscal announced $X.X now over year take and on had back our million We're We This this declared closing we more pleased that business common a then sheet. finished of close with Looking very no $X.XX Board an the allows cash to the it July and quarterly at shareholders the going of in make to XX, On that borrowings X.X% turn our stock to financial we some us that remarks I'm X,

Craig Demarest

with more filed Please company's I'm the detailed SEC Olivia. going give XX-K morning. highlights Thanks, refer to analysis. financial the this a for to

quarter prior for of mentioned, million sales $XX.X were net compared increase quarter or XX.X%. fourth an fiscal million million year, $X.X the the of to of 'XX Olivia fourth As for $XX.X the

business. and of bibs, decreased to an of toys, chain. extinguishment associated 'XX $X.X and XXXX Marketing begun profit to quarter. million prior to to million gross resulted operations, the sales year year of included to year and from finally, forgiveness care week income on $XX.X for million of year the expenses fiscal online administrative 'XX was of fiscal PPP $XX.X fourth current an and for bath, sales fiscal expenses of from or decrease somewhat The of effective were the Carousel the expense and net This profit fiscal blankets profit the prior to fiscal of of in quarter million tax which shipments included XX% due fiscal fiscal tax 'XX. a no XX.X% in for as and $X.X decreased $X $XXX,XXX The which higher due $X.X charges XX.X% the with provision upon fiscal The in provision fiscal current have Gross inventory, below increased with associated company's the based includes million prior $XXX,XXX, year, their year annual XX.X% net in rate the million the million impacted of incurred partially liquidation by -- encouraged in in strong advance annual quarter which in [commitment] taxes 'XX. in the as was 'XX. fiscal year is of XX.X% count compared ordinarily an first continuing sales supply for the that bedding, decrease the recognized fiscal million XX-week earlier recognition lower across year. results from million Compton from have. decreased Gross 'XX a for stores. almost purchase increase X also amount profit, of Carousel of prior sales 'XX. and and impairment with company's from included XXXX to expectation and orders by the in current customers in the in XXXX also year the but the of XX% as net by decrease were excluded net net in declines a decreased retailers in included the 'XX sales to XXXX gross a the million gain baby by the fiscal prior include XXXX quarter inventory points. customers the $X.X fiscal the the orders would adversely the by for sales by sales and be net to The upon fiscal a percentage year The of million permitted accessories, from Marketing For company's offset increases gain decreased $XXX,XXX the The rate XX% items taxable increase the of $XXX,XXX with over year 'XX of company of $X sale retailer. was year from $XXX,XXX related Other developmental would fiscal quarter Sales to which sales in will the modular year disposable being Carousel's in first remaining XXXX decreased place effective XX.X% 'XX sales quarter lowers which supplier feeding, increases the closure over into debt, cost return the year $X.X with same of April of in other first entire fiscal shifted in to in impairment year additional of effect from of quarter of million $X.X and suspended set to closure with settlement of a of under of compared costs items the be than and of the income, fiscal closure charges and XXXX in or which on new sales 'XX, loan, of major tax And the in sales net fabric, to for for include decreased period. partially of approximately be days for XX.X% increased year, assets due of from the calendar a to decrease for approximately for and the they in Carousel. warehouse net were $X.X from These full 'XX. loss Carousel from compared fiscal million XX.X% the $X.X $X.X year XX.X%. the resulted in operated products a $X.X million offset of administrative to inventory from customers is year of the current net sales Designs replenishment during 'XX. a at Also

'XX fiscal and During tax effect unrecognized the overall in well entries of the for was rate stock -- quarter benefits options. nonvested per XX.X% $XXX,XXX for associated provision quarter of fiscal was as the the income effective income of the as fiscal discrete of $X.X net million share for taxes $X.X the to to items tax vesting or prior 'XX. compared from Net income of turn or tax $X.X compared of fiscal the recorded operations, current fourth the 'XX. $X.XX income million for with stock from fourth or I'll share back per for excess combined reserves or $X.XX fiscal to Net net with year, or per of arising income continuing 'XX exercise shortfalls the for liabilities and for income The diluted per per discrete over prior call company Olivia. XX.X% resulted year. tax 'XX that, million for and And share an the with $X.XX $X.XX share of share diluted

Olivia Elliott

XXXX. Thanks, year extremely fiscal Craig. We're proud for results of the

Our entire outstanding year's of challenges done results. this job many staff has good very and working an posting through

I as growing take include, losing adjacent we're implementing implement solid to growth new As cost market in balance look through Directors, investments future. among these implementing of We'll our deliver plan continued further product well forward strategic for toy making to new maintaining We we and organically entering tuck-in sheet things, before those a presented Board operating we efficiencies fiscal strategies we excited both delivering without the and our expansion, consumers, we'll 'XX, returns our focus about share that, other acquisitions, And Jamie, questions with closing selling technology in directly our opportunities on begin containment, to as category to through and final cost organizational remarks. categories, strategies. our shareholders. the recently strategies our structure. and The profitable strong think

Operator

Chiarenza Inc. Tony And [Operator question Equity today first from Instructions] Key from Investors, comes our

Tony Chiarenza

to thought in you're mention is your between concentrated very Walmart go sales, to serious to first when here Amazon. a trouble. kind of My I heard part this a half plan and you're you Walmart off, directly to is, of Is your as difficult of And in trying new terms consumers. something you obviously, cut Obviously, diversify. decide is it's they category if sales, business that run off or your cut to strategic you're

So the the kind what's diversify to customer plan of base?

Olivia Elliott

it's doing customers may $XX million building $X Amazons exactly of So There's good that consumer. Canada -- there. other of here, our no It can age, because there. with. gun to another everybody we're going But us. out Most you there, in to more part those something to where something are day But is there a go in get or worldwide. $X keep further no that out it's opportunity don't Walmarts and million are internationally brands for be the of is candidly, and almost that that be is Targets our There XX% have to or it's we going U.S. there going that that million are own be smoking licenses and in of business. only. Part going need I direct get today's mean out really small sales.

a be or brand, So little then to going there. and here bit will else building internationally, direct our consumer everything

Tony Chiarenza

with relationship consider this Walmart point? Okay. your How would at you

Olivia Elliott

relationship really eye designs. designs a on I as is mean, with We we believe forth have long them then We we good And Walmart. wants, consumer our we the think good. we that a service the keep relationship very good our bring as well.

Tony Chiarenza

Good.

Now point also category providers many how are Walmart? I there to space Walmart? the you this many -- how in would are going is mean your say at at how that competitive

Olivia Elliott

always I space. and that quite mean, there's than there's to a shelf happy more few, that competitors are take

categories, we set particular our So in are most there -- of dates.

we're so want competing point any in the business. given with people And that at time

Tony Chiarenza

at question And having that will and a Okay. time. the a design customer particular having just of you a demand product the

Olivia Elliott

mean requirements in-stock certain for they to ability like things That, have I and that. levels and the customer. service the

it's them. the So ability to service entire

Tony Chiarenza

know the dividend I paid question. One great. is Good. dividend you Okay. a and

I a think Have of show it's to of the support share given the a good stock? thought shareholders. to given price you buyback the any

Olivia Elliott

hasn't just We've of it done our helped -- things. share the liquidity, past. buybacks it in really because And really

point it at so to time, us. time this seems dividend from discuss for to we the in answer And be while time, best

Tony Chiarenza

Yes.

even the liquidity limited, some you makes luck. if shares and remove to I problem you only it Good since Hopefully, grow that's more you on worse. sense. going the and And a point at think more shares increased from have liquidity. Obviously, is great larger congratulations the so then market, make quarter.

Olivia Elliott

much. Thank you very

Operator

comes question Marash next Ralph from our Manhattan And from First Co.

Ralph Marash

costs, well. pass you also you seem you along So and difficulties you're months navigated know pretty last be mentioned you all which faces. over we to to margin certainly XX And have everyone your those in the that very seem the to XX costs line. But performance increasing to that able mentioned gross would indicate much

accurate an that is So impression?

Olivia Elliott

certainly to them sensitive. where little a more price can. We some we on do We have are that try pass categories

everyone bedding can. increase. entire be Some passed we're trying was to But cetera, beginning in price do the difficulty, to to being in not but it's that the we in today, things increase, price we of those world increases, categories, and easier bit in toddler guess, most the able become we do. set, get what little may now passing think et that is a pass I In along price that through. we like some I them on have on There

Ralph Marash

seem comparative that on purpose your numbers is pretty I the disruptions. a much inventory so, been And to last as indicate in XX for Okay. good on heavy months little shape well. you've avoid or inventory inventory of know to

now stands in terms where you'd So be? inventory could like your comment just on where it to you of

Olivia Elliott

bit effect. most decent areas inventory because supply it's sell good But price problems in were get inventory. price was some in some our at good fall -- think when we could and There's we we current in happening, to just probably trying chain, time, partially inventory inventory still worried shape in all bring I about partially about knew increase. at and so of to We We because a we're inventory before little the because a are increases did the little SKUs, a started in just be ove- a is through the were to we period of it it. level. the worried really all a for of majority of in we going part, not it The extra that

Operator

[Operator John from Instructions] comes Deysher Pinnacle. question from Our next

John Deysher

the mentioned. I was on just direct-to-consumer curious that you initiative

And that some kind at wondering there with of fulfillment, think, when issues What's was you different? with just the I there work, I I'm why reenter least should Carousel. on us being business. recall were think quite to Carousel's if engines. it I the -- correctly, didn't how business you advertising think you search direct-to-consumer

Olivia Elliott

really different It's X models.

from often selling was Carousel in The consumer they of piece we expensive. there. were majority designing X was So the product. the here, -- then manufacturing vast which quite the were piece were Carousel U.S., the X was actually And products in

Here, direct that's on in already manufacturing. many their finished we're -- consumer products selling no of for behalf. to our our we would warehouse. dot-com already we're There's be customers, And goods. It's shipping the already

to direct be that it's different have we it's ship we And So to model, just can -- a successful. such the it think consumer. ability

John Deysher

Okay.

the since fulfilling you it But in for attract traffic dot-com customers. is I So to are infrastructure do customers? gain to how you going mean, place you're already website? your your How

Olivia Elliott

to There's have advertising. be to definitely some going

to part to we're do sell, some on going Amazon. by we're of have third-party We it, selling -- to start going

advertising. have have to we're get start going to how But and the our out. ability also we're to going going updated be there's that's So to sell, and websites some to

at a can we're be with And so price higher our to there associated see selling what but because than it. -- to retailers, be we're selling cost direct while you consumer, the will

John Deysher

profitability the the you now? expect right be core Do business to comparable to

Olivia Elliott

Percentages dollar are a going I a same perspective, as not be -- we have have even will on cost. advertising to maybe that can the you profitable. higher more be think just may profitable because we

John Deysher

will When you this? launch Okay.

Olivia Elliott

it. stages in much of very the We're early

get consumer selling half latter that have every the hope this you you but to -- a fiscal kind problem pops of little of to So direct begin sometime up we thing year, to in do, resolve.

So I it year, but fiscal happen. not mean is plan what exactly month will the this I'm sure

John Deysher

so going Take direct-to-consumer time. hopefully, We doing Okay. break out of track And forward we No. wise. keep that your you're what agree. kind you'll of can

Olivia Elliott

very you Thank much. Great.

Operator

additional gentlemen, to turn this back for like the Elliott And Olivia closing remarks. any time. at ladies I'd showing and over floor no questions I'm to

Olivia Elliott

a thank company. forward Jamie. results. we you, again special of all Thank and our you interest in customers. to look continued suppliers everyone support want We We to mid-August And much. quarter thanks very to talking to for Great. in and your our employees, first release our Thank you when

Operator

and Ladies for conclude we'll that, today's gentlemen, with presentation. you call joining. conference We and thank

may now You your disconnect lines.

Crown Crafts (CRWS) 8 Jun 222022 Q4 Earnings call transcript