Crown Crafts Reports Fiscal 2022 Third Quarter Results

Rhea-AI Summary

Crown Crafts reported strong financial performance for Q3 of fiscal 2022, with net sales excluding Carousel Designs up 23.8% quarter-over-quarter and 14.6% year-to-date. Earnings per diluted share rose 9.1% for the quarter, reaching $0.24. The company saw increased net income of $2.4 million on $22.7 million in sales, compared to $2.1 million and $19.5 million in the previous year. However, gross profit margin decreased to 27.1% from 31.6% in the prior-year quarter. Olivia Elliott was appointed CEO, effective March 1, 2022. A cash dividend of $0.08 per share was declared, payable April 8, 2022.

Positive

• Net sales excluding Carousel Designs increased by 23.8% for the quarter and 14.6% year-to-date.
• Earnings per diluted share rose by 9.1% for the quarter, reaching $0.24.
• Net income for Q3 increased to $2.4 million, compared to $2.1 million in the prior year.
• Cash dividend of $0.08 per share declared, showing commitment to shareholder returns.

Negative

• Gross profit margin decreased to 27.1% from 31.6% in the prior-year quarter.
• Net income impacted by a net loss of $638,000 associated with Carousel.

• Net sales excluding Carousel Designs up 23.8% for the quarter and 14.6% year-to-date
• Earnings per diluted share up 9.1% for the quarter and 8.6% year-to-date, excluding the impacts of Carousel and the forgiveness of the Company’s PPP loan
• Board appoints Olivia Elliott as Chief Executive Officer, effective March 1, 2022
  

GONZALES, La., Feb. 09, 2022 (GLOBE NEWSWIRE) -- Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today reported results for the third quarter of fiscal year 2022, which ended December 26, 2021.

“We saw significant sales and earnings increases in the third quarter and year-to-date periods as a result of our strong management team and product development efforts," said E. Randall Chestnut, Chairman and Chief Executive Officer. “We are particularly pleased with the progress of our expanded line of Sassy developmental toys, which have gained placements in retail markets throughout the country.”

“Sales were up across all product categories, reflecting the ongoing strength of our legacy businesses as well as our newer lines,” said Olivia Elliott, President and Chief Operating Officer. “We will continue to focus on developing new products to strengthen our Company for the future while we also navigate the challenges of the current marketplace.”

Financial Results

Net income for the third quarter of fiscal 2022 was $2.4 million, or $0.24 per diluted share, on net sales of $22.7 million, compared with net income of $2.1 million, or $0.21 per diluted share, on net sales of $19.5 million for the third quarter of fiscal 2021. Gross profit for the current-year quarter was 27.1% of net sales, down from 31.6% of net sales in the prior-year quarter. The prior-year quarter included net sales and a net loss of $1.1 million and $102,000, respectively, associated with the Carousel Designs business, which ceased operations in May 2021.  

Excluding the impact of Carousel, net sales, gross margin percentage, net income and diluted earnings per share would have been $18.4 million, 31.8%, $2.2 million and $0.22, respectively, for the third quarter of fiscal 2021.

For the nine-month fiscal period, net income was $7.5 million, or $0.74 per diluted share, on net sales of $61.7 million, compared with net income of $5.8 million, or $0.57 per diluted share, on net sales of $57.3 million for the first nine months of fiscal 2021. Current-year net income was impacted favorably by a pre- and post-tax $1,985,000 gain on extinguishment of debt related to the forgiveness of the Company’s Paycheck Protection Program Loan (the “PPP Loan”). The current year also included net sales and a net loss of $638,000 and $797,000, respectively, associated with Carousel, while the prior year included net sales and a net loss of $4.1 million and $38,000, respectively, associated with Carousel.

Excluding the impacts of the PPP Loan in fiscal 2022 and Carousel in both nine-month periods, current-year net sales, gross margin percentage, net income and diluted earnings per share would have been $61.0 million, 28.8%, $6.3 million and $0.63, respectively, compared to prior-year net sales, gross margin percentage, net income and diluted earnings per share of $53.2 million, 31.4%, $5.9 million and $0.58, respectively.

Elliott Promoted to Chief Executive Officer

The Company also announced today that its Board of Directors has promoted Olivia Elliott to Chief Executive Officer, effective March 1, 2022. Elliott has been President and Chief Operating Officer of the Company since January 4, 2021. She joined the Company in 2001 as Treasurer and served as Chief Financial Officer from 2008 to 2020. E. Randall Chestnut, who has been the Company’s Chief Executive Officer since July 2001, will continue as Chairman of the Board.

“I have worked with Olivia for more than 20 years and have watched her progress from Treasurer to President and Chief Operating Officer during a time of solid growth and profitability for the Company,” Chestnut said. “Her contributions as a leader during that period have been phenomenal, and the Board believes she is uniquely qualified to step into the role of CEO and lead the Company to further growth.”

“I am excited to have this opportunity to continue to work with our outstanding team,” Elliott said. “With the strengths of our people and our products, Crown Crafts is in an excellent position to continue achieving profitable growth and providing long-term value for all of our stakeholders.”

Quarterly Cash Dividend

In addition, the Board of Directors has declared a quarterly cash dividend on the Company’s Series A common stock of $0.08 per share, which will be paid on April 8, 2022, to stockholders of record at the close of business on March 18, 2022. “Our Board remains committed to delivering solid returns to shareholders and is confident in the continued strength of our businesses and management team,” Chestnut said.

Conference Call

The Company will host a teleconference today at 10:00 a.m. Central Standard Time to discuss the Company’s results, during which interested individuals will be given the opportunity to ask appropriate questions. To join the teleconference, dial (844) 861-5504 and ask to be joined into the Crown Crafts, Inc. call. The teleconference can also be accessed in listen-only mode by visiting the Company’s website at www.crowncrafts.com. The financial information to be discussed during the teleconference may be accessed prior to the call on the investor relations portion of the Company’s website. A telephone replay of the teleconference will be available one hour after the end of the call through 4:00 p.m. Central Standard Time on February 16, 2022. To access the replay, dial (877) 344-7529 in the United States or (412) 317-0088 from international locations and refer to conference number 1478907.

About Crown Crafts, Inc.

Crown Crafts, Inc. designs, markets and distributes infant, toddler and juvenile consumer products. Founded in 1957, Crown Crafts is one of America’s largest producers of infant bedding, toddler bedding, bibs and developmental toys. The Company operates through its two wholly-owned subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc., which market a variety of infant, toddler and juvenile products under Company-owned trademarks, as well as licensed collections and exclusive private label programs. Sales are made directly to retailers such as mass merchants, large chain stores and juvenile specialty stores. For more information, visit the Company’s website at www.crowncrafts.com.

The foregoing contains forward-looking statements within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such statements are based upon management’s current expectations, projections, estimates and assumptions. Words such as “expects,” “believes,” “anticipates” and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. These risks include, among others, general economic conditions, including changes in interest rates, in the overall level of consumer spending and in the price of oil, cotton and other raw materials used in the Company’s products, changing competition, changes in the retail environment, the Company’s ability to successfully integrate newly acquired businesses, the level and pricing of future orders from the Company’s customers, the extent to which the Company’s business is concentrated in a small number of customers, the Company’s dependence upon third-party suppliers, including some located in foreign countries, customer acceptance of both new designs and newly-introduced product lines, actions of competitors that may impact the Company’s business, disruptions to transportation systems or shipping lanes used by the Company or its suppliers, and the Company’s dependence upon licenses from third parties. Reference is also made to the Company’s periodic filings with the Securities and Exchange Commission for additional factors that may impact the Company’s results of operations and financial condition. The Company does not undertake to update the forward-looking statements contained herein to conform to actual results or changes in our expectations, whether as a result of new information, future events or otherwise.

Contact:

Craig J. Demarest
Vice President and Chief Financial Officer
(225) 647-9118
cdemarest@crowncrafts.com

CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SELECTED FINANCIAL DATA
In thousands, except percentages and per share data
(Unaudited)

		Three-Month Periods Ended							Nine-Month Periods Ended
		December 26, 2021			December 27, 2020				December 26, 2021			December 27, 2020
Net sales		$	22,742		$	19,476			$	61,674		$	57,340
Gross profit			6,170			6,153				16,894			18,270
Gross profit percentage			27.1%			31.6%				27.4%			31.9%
Income from operations			3,076			2,733				7,270			7,668
Gain on extinguishment of debt			-			-				1,985			-
Income before income tax expense			3,037			2,723				9,289			7,653
Income tax expense			605			582				1,806			1,810
Net income			2,432			2,141				7,483			5,843
Basic and diluted earnings per share		$	0.24		$	0.21			$	0.74		$	0.57
Weighted Average Shares Outstanding:
Basic			10,078			10,208				10,045			10,195
Diluted			10,107			10,224				10,075			10,200

CONSOLIDATED BALANCE SHEETS
SELECTED FINANCIAL DATA
In thousands

		December 26, 2021
		(Unaudited)			March 28, 2021
Cash and cash equivalents		$	2,052		$	613
Accounts receivable, net of allowances			21,002			19,338
Inventories			24,467			20,335
Total current assets			48,915			41,470
Operating lease right of use assets			2,838			4,068
Finite-lived intangible assets - net			2,774			3,163
Goodwill			7,125			7,125
Total assets		$	63,479		$	58,082
Total current liabilities			17,569			12,946
Operating lease liabilities, noncurrent			1,274			2,641
Shareholders’ equity			43,902			41,865
Total liabilities and shareholders’ equity		$	63,479		$	58,082

FAQ

What were Crown Crafts' Q3 2022 net sales results?

Crown Crafts reported net sales of $22.7 million for Q3 2022, which was a 23.8% increase excluding Carousel Designs.

How much did Crown Crafts earn per share in Q3 2022?

Crown Crafts earned $0.24 per diluted share in Q3 2022, up 9.1% from the previous year.

What is the gross profit margin for Crown Crafts in Q3 2022?

The gross profit margin for Crown Crafts in Q3 2022 was 27.1%, down from 31.6% in the prior-year quarter.

When will Crown Crafts pay its declared cash dividend?

Crown Crafts has declared a quarterly cash dividend of $0.08 per share, payable on April 8, 2022.

Who has been appointed as the new CEO of Crown Crafts?

Olivia Elliott has been appointed Chief Executive Officer of Crown Crafts, effective March 1, 2022.