Crown Crafts Inc (CRWS) 2023 Q3 法說會逐字稿

Good day, and welcome to the Crown Crafts, Inc. Third Quarter Fiscal Year 2023 Conference Call.

美好的一天，歡迎來到 Crown Crafts, Inc. 2023 財年第三季度電話會議。

(Operator Instructions)

（操作員說明）

Please note, this event is being recorded. I'd now like to turn the conference over to Craig Demarest, Chief Financial Officer. Please go ahead.

請注意，正在記錄此事件。我現在想將會議轉交給首席財務官 Craig Demarest。請繼續。

Thank you, Jason. Welcome to the Crown Crafts investor conference call for the third quarter of fiscal year 2023. With me today is Olivia Elliott, the company's President and Chief Executive Officer. A telephone replay of this call will be available 1 hour after the end of the call through 4:00 p.m. Central Time on May 15.

謝謝你，傑森。歡迎來到 Crown Crafts 2023 財年第三季度投資者電話會議。今天和我在一起的是公司總裁兼首席執行官奧利維亞·埃利奧特 (Olivia Elliott)。通話結束後 1 小時至下午 4:00 將提供此通話的電話重播。中部時間 5 月 15 日。

Also, a web replay of this call will be available for 90 days and can be accessed by visiting our website at www.crowncrafts.com. Before we begin, I would like to remind listeners of the cautionary language regarding forward-looking statements contained in the press release. That same language applies to comments made in today's conference call. I will now turn the call over to Olivia.

此外，此電話會議的網絡重播將提供 90 天，可通過訪問我們的網站 www.crowncrafts.com 進行訪問。在我們開始之前，我想提醒聽眾注意新聞稿中有關前瞻性陳述的警示性語言。同樣的語言適用於今天的電話會議中發表的評論。我現在將把電話轉給奧利維亞。

Thank you, Craig. Good morning, everyone, and thank you for joining us for our third quarter fiscal year 2023 conference call. As we noted in our press release that went out this morning, the ongoing macroeconomic challenges related to inflation continued to impact our consumer demand, which was, in general, worse than expected during our third quarter.

謝謝你，克雷格。大家早上好，感謝您加入我們的 2023 財年第三季度電話會議。正如我們在今天上午發布的新聞稿中指出的那樣，與通貨膨脹相關的持續宏觀經濟挑戰繼續影響我們的消費者需求，總體而言，第三季度的情況比預期的要差。

We also continue to experience lower replenishment orders for some items for which retailers still have excess inventory. In spite of these challenges, our balance sheet remains strong, and we believe we're well positioned to withstand the current headwinds and take advantage of future growth opportunities when the markets return to more normal conditions.

我們還繼續遇到一些零售商庫存過剩的商品的補貨訂單減少。儘管面臨這些挑戰，我們的資產負債表依然強勁，我們相信我們有能力抵禦當前的逆風，並在市場恢復到更正常的條件時利用未來的增長機會。

I'm going to look at the third quarter results at a high level, and then I'm going to turn over the call to Craig, and he'll go into a little more detail. Third quarter net sales were $19 million, down from $22.7 million last year. Year-to-date net sales were $53.4 million, down from $61.7 million last year.

我將在高層次上查看第三季度的結果，然後我將把電話轉給克雷格，他會更詳細地介紹一下。第三季度淨銷售額為 1900 萬美元，低於去年的 2270 萬美元。年初至今的淨銷售額為 5340 萬美元，低於去年的 6170 萬美元。

Multiple forces in the marketplace have contributed to the sales decline. After experiencing empty shelves during the 2021 holiday season due to port issues, retailers responded by building up their inventory levels during the first calendar quarter of 2022, resulting in over-inventory situation by late spring.

市場上的多種力量導致了銷售額的下降。在 2021 年假期期間由於港口問題出現空貨架後，零售商的應對措施是在 2022 年第一季度增加庫存水平，導致晚春出現庫存過剩情況。

This situation has been exacerbated by a change in consumer buying patterns, whereby many consumers are now trading down to lower-priced items, buying fewer items or foregoing some items altogether due to inflationary concerns. In response, many retailers have lowered their in-stock levels.

消費者購買模式的變化加劇了這種情況，許多消費者現在由於對通貨膨脹的擔憂而降價購買價格較低的商品，購買較少的商品或完全放棄某些商品。作為回應，許多零售商降低了庫存水平。

At retailers where we can see data on sell-through to consumers, in many cases, replenishment orders aren't keeping up with sell-through. It is important to note that our retail partnerships remain strong, and we continue to place new items.

在我們可以看到消費者銷售率數據的零售商處，在許多情況下，補貨訂單跟不上銷售率。值得注意的是，我們的零售合作夥伴關係依然牢固，我們會繼續投放新商品。

Third quarter net income was $1.3 million or $0.13 per diluted share compared with $2.4 million or $0.24 per diluted share last year. Year-to-date net income was $4.8 million or $0.48 per diluted share compared with $7.5 million last year or $0.74 per diluted share. Prior year-to-date net income included an almost $2 million gain of forgiveness of our Paycheck Protection Program loan and a $797,000 loss related to Carousel Designs.

第三季度淨收入為 130 萬美元或攤薄後每股收益 0.13 美元，而去年為 240 萬美元或攤薄後每股收益 0.24 美元。年初至今的淨收入為 480 萬美元或每股攤薄收益 0.48 美元，而去年為 750 萬美元或每股攤薄收益 0.74 美元。年初至今的淨收入包括近 200 萬美元的薪資保護計劃貸款免除收益和與 Carousel Designs 相關的 797,000 美元損失。

Excluding the impact of the loan forgiveness and Carousel Designs, prior year-to-date net income would have been $6.3 million or $0.63 per diluted share. We finished the quarter with $3.1 million in cash and no borrowings on our revolving line of credit.

排除貸款減免和 Carousel Designs 的影響，上一年迄今的淨收入為 630 萬美元或每股攤薄收益 0.63 美元。我們以 310 萬美元的現金結束了本季度，並且我們的循環信貸額度沒有借款。

Although our inventory remains a little high at $25.8 million at the end of the quarter compared with $24.5 million at the end of December 2021, we were able to reduce our inventory levels during the third quarter, a period in which we typically see an increase in inventory as we approach Chinese New Year.

儘管與 2021 年 12 月末的 2450 萬美元相比，本季度末我們的庫存仍略高，為 2580 萬美元，但我們能夠在第三季度降低庫存水平，在此期間我們通常會看到庫存增加臨近農曆新年時的庫存。

We continue to be diligent in managing inventory, the majority of which is current in-line products. In order to move some inventory to make room for new programs, we have provided higher than normal discounts to retailers in some cases, and we've also taken some reserves on inventory that we intend to sell to closeout customers.

我們繼續努力管理庫存，其中大部分是當前在線產品。為了轉移一些庫存以為新計劃騰出空間，我們在某些情況下向零售商提供了高於正常的折扣，並且我們還對打算出售給清倉客戶的庫存進行了一些儲備。

We believe that our inventory will return to close to normal levels over the next couple of quarters. We also announced that our Board of Directors declared an $0.08 per share cash dividend on the company's common stock that will be paid on April 7, 2023, to shareholders of record at the close of business on March 17, 2023.

我們相信我們的庫存將在未來幾個季度恢復到接近正常水平。我們還宣布，我們的董事會宣布將於 2023 年 4 月 7 日向 2023 年 3 月 17 日營業結束時登記在冊的股東派發每股 0.08 美元的公司普通股現金股息。

This represents an annualized yield of 5.4% based on yesterday's closing price. We're very pleased that our balance sheet remains strong, and we can continue our commitment to return long-term value to our stockholders.

根據昨日的收盤價，這意味著年化收益率為 5.4%。我們很高興我們的資產負債表保持強勁，我們可以繼續致力於為股東回報長期價值。

We remain excited about our long-term opportunities as we move forward with our strategic plan, which includes expanding in the toy category, growing our product offering both organically and through acquisition, increasing our direct-to-consumer sales, reducing operating costs, and making further investments to enhance our technology and improve our organizational structure.

隨著我們推進我們的戰略計劃，我們仍然對我們的長期機會感到興奮，其中包括擴大玩具類別，通過有機和收購增加我們的產品供應，增加我們直接面向消費者的銷售，降低運營成本，以及進一步投資以提高我們的技術並改善我們的組織結構。

At the same time, we're managing our business to maximize profitability in the face of current challenges. And now I'll turn the call over to Craig.

與此同時，面對當前的挑戰，我們正在管理我們的業務以最大限度地提高盈利能力。現在我會把電話轉給克雷格。

Thanks, Olivia. I'll only give financial highlights. For a more detailed analysis, I'll refer you to the company's Form 10-Q filed with the SEC this morning. As Olivia mentioned, net sales were $19 million for the third quarter of fiscal '23 compared with $22.7 million for the third quarter of the prior year, a decrease of $3.7 million or 16.4%.

謝謝，奧利維亞。我只會給出財務亮點。如需更詳細的分析，請參考公司今天上午向美國證券交易委員會提交的 10-Q 表格。正如 Olivia 提到的那樣，23 財年第三季度的淨銷售額為 1900 萬美元，而去年同期為 2270 萬美元，減少了 370 萬美元或 16.4%。

Sales of bedding, blankets and accessories decreased by $2.8 million, while sales of bibs, toys and disposable products decreased by $963,000. Sales declined in part due to sales to a struggling retail customer that were approximately $600,000 lower in the current year quarter.

床上用品、毯子和配件的銷售額減少了 280 萬美元，而圍嘴、玩具和一次性產品的銷售額減少了 963,000 美元。銷售額下降的部分原因是對陷入困境的零售客戶的銷售額在本年度季度減少了約 600,000 美元。

We're also seeing the effect of current macroeconomic conditions, more so in the current quarter than in prior quarters, and as consumers diverted their discretionary spending to holiday purchases.

我們還看到了當前宏觀經濟狀況的影響，與前幾個季度相比，本季度的影響更大，而且消費者將可自由支配的支出轉移到假日購物上。

Net sales decreased to $53.4 million for the first 9 months of fiscal '23 compared with $61.7 million for the same period in the prior year, a decrease of $8.2 million or 13.4%. Sales of bedding, blankets and accessories decreased by $6.8 million and sales of bibs, toys and disposable products decreased by $1.4 million.

23 財年前 9 個月的淨銷售額下降至 5340 萬美元，而去年同期為 6170 萬美元，下降 820 萬美元或 13.4%。床上用品、毯子和配件的銷售額減少了 680 萬美元，圍嘴、玩具和一次性產品的銷售額減少了 140 萬美元。

The decreases in sales are primarily due to lower replenishment orders at retailers as the company's customers continue to reduce purchases because their inventories increased, which we believe resulted from customers' excess inventory purchases during the first quarter of calendar '22 and consumers' response to macroeconomic conditions.

銷售額下降的主要原因是零售商的補貨訂單減少，因為公司的客戶因庫存增加而繼續減少採購，我們認為這是由於客戶在 22 年第一季度的庫存購買過多以及消費者對宏觀經濟的反應所致狀況。

Gross profit decreased by $1.7 million and decreased from 27.1% of net sales for the prior year quarter to 23.7% of net sales for the current year quarter. Gross profit decreased by $1.8 million but increased from 27.4% of net sales for the prior year 9-month period to 28.3% of net sales for the same period in the current year.

毛利潤減少了 170 萬美元，從去年同期占淨銷售額的 27.1% 下降到本年度季度淨銷售額的 23.7%。毛利潤減少了 180 萬美元，但從去年 9 個月期間占淨銷售額的 27.4% 增加到本年度同期淨銷售額的 28.3%。

The decrease in the gross profit amount is associated with the decline in sales during the period and is net of the positive impact of the closure of Carousel, which in the prior year 9-month period recognized a gross loss of $689,000 as a result of the closure of the business in the first quarter of fiscal '22.

毛利潤額的減少與該期間銷售額的下降有關，並扣除了 Carousel 關閉的積極影響，Carousel 在去年的 9 個月期間確認了 689,000 美元的毛虧損，原因是22 財年第一季度關閉業務。

Although the gross profit in the prior year 9-month period was impacted by increases in costs across the entire supply chain, the company in the current year has realized some stabilization in its input costs. Finally, the company has benefited from recent increases in the selling prices of our products.

儘管去年 9 個月期間的毛利受到整個供應鏈成本增加的影響，但公司今年的投入成本已實現一定程度的穩定。最後，公司受益於近期產品售價的上漲。

Marketing and administrative expenses decreased by $352,000 but increased from 13.6% of net sales for the prior year quarter to 14.4% of net sales for the current year quarter. Marketing and administrative expenses decreased by $733,000 but increased from 15.6% of net sales for the prior year 9-month period to 16.6% of net sales for the same period in the current year.

營銷和管理費用減少了 352,000 美元，但從去年同期淨銷售額的 13.6% 增加到本年度季度淨銷售額的 14.4%。營銷和管理費用減少了 733,000 美元，但從去年 9 個月期間淨銷售額的 15.6% 增加到本年度同期淨銷售額的 16.6%。

The prior year 9-month period included $496,000 of charges incurred by Carousel. Other items in the prior year 9-month period include a just under $2 million gain recognized from the forgiveness of the PPP loan. The current year-to-date provision for income taxes is based upon an estimated annual effective tax rate from continuing operations of 23.3% as compared with an estimated annual effective tax rate from continuing operations of 20% for the prior year.

前一年的 9 個月期間包括 Carousel 產生的 496,000 美元費用。前一年 9 個月期間的其他項目包括因 PPP 貸款的免除而確認的略低於 200 萬美元的收益。本年初至今的所得稅撥備是基於持續經營業務的估計年度有效稅率為 23.3%，而上一年持續經營業務的估計年度有效稅率為 20%。

The gain on extinguishment of debt associated with the forgiveness of the PPP loan was permitted to be excluded from taxable income, the effect of which lowered the effective tax rate for the prior year period by approximately 4 percentage points.

與免除 PPP 貸款相關的債務清償收益被允許從應稅收入中扣除，其影響使上一年度的實際稅率降低了約 4 個百分點。

During both the current and prior year quarters, the company recorded discrete reserves for unrecognized tax liabilities as well as adjustments to income tax expense associated with excess tax benefits or shortfalls arising from the vesting of nonvested stock and the exercise of stock options.

在本季度和上一年季度，公司記錄了未確認稅收負債的離散準備金，以及與非歸屬股票歸屬和股票期權行使產生的超額稅收優惠或短缺相關的所得稅費用調整。

The effective tax rate from continuing operations, combined with the effect of the discrete income tax items, resulted in an overall provision for income taxes of 24.4% for the current year 9-month period and 19.4% for the comparable prior year period.

持續經營的有效稅率，加上離散所得稅項目的影響，導致本年度 9 個月期間的所得稅總準備金為 24.4%，上年同期為 19.4%。

Net income for the third quarter of fiscal '23 was $1.3 million or $0.13 per diluted share compared to net income of $2.4 million or $0.24 per diluted share for the third quarter of fiscal '22. Net income for the first 9 months of fiscal '23 was $4.8 million or $0.48 per diluted share compared to net income of $7.5 million or $0.74 per diluted share for the same period in fiscal '22. And with that, I will turn the call back to Olivia.

23 財年第三季度的淨收入為 130 萬美元或攤薄後每股收益 0.13 美元，而 22 財年第三季度的淨收入為 240 萬美元或攤薄後每股收益 0.24 美元。 23 財年前 9 個月的淨收入為 480 萬美元或攤薄後每股收益 0.48 美元，而 22 財年同期的淨收入為 750 萬美元或攤薄後每股收益 0.74 美元。有了這個，我會把電話轉回給奧利維亞。

Thank you, Craig. Jason, we'll now open up the line for questions.

謝謝你，克雷格。傑森，我們現在打開提問熱線。

(Operator Instructions)

（操作員說明）

Our first question comes from Michael Bernstein from Laurelcrest Capital.

我們的第一個問題來自 Laurelcrest Capital 的 Michael Bernstein。

How much are you -- I noticed you said the sales were down $600,000 with one customer but -- and that's probably Buy Buy Baby. Are you getting credit coverage with that customer now?

你是多少——我注意到你說一位顧客的銷售額下降了 600,000 美元，但是——那可能是 Buy Buy Baby。您現在是否獲得該客戶的信用保險？

We are not.

我們不是。

And do you have...

還有你有沒有...

We are no longer shipping (inaudible).

我們不再發貨（聽不清）。

You're not shipping to them. Do you have any exposure?

你不運送給他們。你有曝光嗎？

We do have a little bit of exposure. It's not very much, but we have some.

我們確實有一點曝光。不是很多，但我們有一些。

And how much business did you do with them the prior year?

前一年你和他們做了多少生意？

They were about 2% of our business.

他們約占我們業務的 2%。

2%?

2%？

2%.

2%。

I'm sorry. Did you say 2% or 3%? I'm sorry, I couldn't hear you.

對不起。你說的是2%還是3%？對不起，我聽不見你說話。

Somewhere about 2%. 2% to 3%, yes.

大約 2%。 2% 到 3%，是的。

Our next question comes from John Deysher from Pinnacle.

我們的下一個問題來自 Pinnacle 的 John Deysher。

Just a quick question in terms of shelf space here. It sounds like you're making a lot of accommodations to the -- to your customers. And I just want to confirm that you feel those accommodations are allowing you to maintain your shelf space?

這裡只是一個關於貨架空間的快速問題。聽起來您正在為您的客戶提供很多便利。我只是想確認一下，您是否覺得這些便利設施可以讓您保持貨架空間？

We do. I mean, as anything goes, you lose a peg, you gain a peg. But overall, our shelf space remains very strong. I think the biggest problem is that the customers aren't reordering to the same levels as the consumers are buying.

我們的確是。我的意思是，無論如何，你失去了一個掛鉤，你獲得了一個掛鉤。但總的來說，我們的貨架空間仍然非常強大。我認為最大的問題是客戶沒有重新訂購到與消費者購買相同的水平。

Okay. So it's more of a macro headwind than you losing shelf space as the reason for the sales decline?

好的。所以這比你失去貨架空間更像是一個宏觀逆風作為銷售下降的原因？

Correct.

正確的。

Okay. Okay. Regarding the Buy Buy Baby exposure, can you give us an idea of what the dollar amount is?

好的。好的。關於Buy Buy Baby 的曝光，您能給我們介紹一下金額是多少嗎？

It's less than $0.25 million.

不到 25 萬美元。

Less than $0.25 million. Okay. All right. Very good. Are any of your other customers in any kind of distressed situation like that?

不到 25 萬美元。好的。好的。非常好。您的其他客戶中是否有任何類似的苦惱情況？

Not that we're aware of. I mean, everybody else, we continue to ship and continue to get the credit coverage.

不是我們知道的。我的意思是，其他人，我們繼續發貨並繼續獲得信貸保障。

Okay. And no difficulty collecting receivables?

好的。收取應收賬款沒有困難？

Nope.

沒有。

(Operator Instructions)

（操作員說明）

There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Olivia Elliott for any closing remarks.

隊列中沒有更多問題。我們的問答環節到此結束。我想將會議轉回給 Olivia Elliott 作閉幕詞。

Thank you. And thank you, everyone, for your continued support and interest in the company. And a special thanks to all of our employees, suppliers and customers. We look forward to talking to you again in June when we release our fourth quarter and fiscal year 2023 results. Thank you.

謝謝。感謝大家一直以來對公司的支持和興趣。還要特別感謝我們所有的員工、供應商和客戶。我們期待在 6 月發布第四季度和 2023 財年業績時再次與您交談。謝謝。

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。