Q2 2024 Crown Crafts Inc Earnings Call

Hello, and welcome to the Crown Crafts, Inc. Second quarter fiscal year, 'twenty 'twenty four conference call.

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Please note this event is being recorded.

I'd now like to turn the conference over to John Bosler three part advisors. Please go ahead.

Thank you Jay and good morning, everyone. We appreciate you joining us for the Crown Crafts second quarter fiscal 2024 conference call.

Joining me on the call today are crown crafts, President and CEO, Olivia Elliott and the company's CFO Craig <unk>.

Earlier this morning Crown Crafts filed its 10-Q and issued a press release regarding our second quarter fiscal 2024 results.

Copy of this release is available on the company's website at Crown Crafts dotcom.

During today's call the company will make certain forward looking statements and actual results may differ materially from those expressed or implied.

These statements are subject to risks and uncertainties that may be beyond crown crafts control and the company is under no obligation to update these statements.

For more information about the company's risk factors and other uncertainties. Please refer to the company's filings with the Securities and Exchange Commission.

Finally, I would like to remind you today's call's being recorded and a replay will be available through the company's investor Relations page.

Now I would like to turn the call over to the President and CEO Olivia Elliott.

Thank you John and good morning, everyone. Our second quarter results reflect the continued progress at Manhattan, Joy and year over year sales growth within our two legacy categories, while encouraging cost pressures facing consumers continue to constrain spending even though overall inflation has trended lower in recent months.

The reopening of 11 Bye Bye baby stores is a welcome addition to the marketplace, but this represents only a fraction of the brick and mortar stores that were closed as part of its bankruptcy earlier this year.

Having a physical location to experience the difference between our products and others is a key differentiator and we believe specialty retailers represented an opportunity going forward. We continue to work with our existing customers to maintain our strong relationships and look for additional cost reduction opportunities across the company.

We are effectively managing our inventory at the end of the quarter inventory for our staffing and no joke brands was 21 million compared to almost 28 million a year ago.

With that I would like to turn the call over to Craig to cover some financial information.

Thank you Olivia and good morning, everyone.

Net sales for the second quarter of fiscal 'twenty, four increased 28, 9% to $24 1 million compared to $18 7 million in the prior year quarter or an increase of $5 4 million.

The increase is primarily attributable to the addition of Manhattan toy, which added $4 8 million and net sales to the current year quarter.

And due to slight increases in our note, Joe and SaaS businesses.

Gross profit for the second quarter was 27, 3% compared to 29, 1% in the second quarter of fiscal 'twenty three.

The profit decrease was primarily attributable to higher lease costs for our warehouse in California.

Our second quarter marketing and administrative expenses were 4 million up $1 3 million from $2 7 million in the prior year quarter and increased from 14, 6% of net sales for the prior year quarter to 16, 7% of net sales currently.

The increase is primarily driven by expenses of Manhattan toy.

Net income for the quarter was 1.8 million or 18 cents per diluted share compared to net income of $2 million or 20 cents per diluted share in the prior year quarter.

Now turning to our balance sheet.

Cash and cash equivalents at the end of the quarter or 1.9 million compared to 1.7 million at the end of fiscal 'twenty three.

And borrowings on our revolver at the end of the quarter were $9 8 million compared to $12 7 million at the end of fiscal 'twenty three.

And finally, we paid a regularly regular quarterly dividend of eight <unk> per share and declared our next dividend, which will be paid in January.

On an annualized basis, our shares currently offer a 7.6% yield based on yesterday's closing price.

And now I'll turn the call back over to Olivia for additional comments. Thank you Craig.

Since we acquired Manhattan Torreon March its sales have followed their historical trends with the September quarter outpacing G and we expect the upcoming holiday quarter to be their largest sales quarter, representing between 35% to 40% of its annual sales we.

We continue to find ways to reduce costs, which should lead to better margins for Manhattan toy we're.

We're encouraged by the favorable response, we received at last month's New York Toy Fair, where we introduced new toy does that we will continue to proactively manage our business in the current challenging economic environment. So that we remain in a position to capitalize on growth opportunities.

We continue to be optimistic about the long term prospects of the company and look forward to updating you on our updating you on our progress next quarter with that I'd like to open up the line for questions M. J.

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

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At this time, we will pause momentarily to assemble our roster.

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This concludes our question and answer session I would now like to hand, the call back to Olivia Elliott for closing remarks.

Thank you for your continued interest in our company, we will be participating in the three part advisors ideas conference in Dallas Tomorrow November 16th we look forward to speaking with you again, when we report our third quarter results in February.

Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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