Charles & Colvard Ltd (CTHR) 2024 Q3 法說會逐字稿

Good day and welcome to the Charles & Colvard third quarter fiscal year 2024 earnings call and webcast. All participants will be in a listen only mode. (Operator Instructions)

大家好，歡迎參加 Charles & Colvard 2024 財年第三季財報電話會議和網路廣播。所有參與者將處於僅聆聽模式。（操作員指示）

This earnings call may contain forward-looking statements as defined in Section 27 A. of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth, expressions identify forward-looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in contemplated by or underlying the forward-looking statements.

本次收益電話會議可能包含經修訂的 1933 年證券法第 27A 條所定義的前瞻性陳述，其中包括有關公司業務戰略和增長等的陳述，這些表述表明前瞻性陳述主要基於我們公司的預期，並受到許多風險和不確定因素的影響，其中一些無法預測或量化，也超出了我們的控制範圍。未來發展和實際結果可能與前瞻性陳述中預期或潛在的結果有重大差異。

In light of these risks and uncertainties, there can be no further assurance that the forward-looking information will prove to be accurate. Accompanying today's call is a supporting PowerPoint slide deck, which is available in the Investor Relations section of the company's website at ir.charlesandcolvard.com/events.

鑑於這些風險和不確定性，我們無法進一步保證前瞻性資訊的準確性。今天的電話會議附有配套的 PowerPoint 幻燈片，可在公司網站 ir.charlesandcolvard.com/events 的投資者關係部分取得。

The company will be hosting a question and answer session. At the conclusion of the prepared remarks, should you have any questions you'd like to submit, please e-mail ir@Charles&Colvard.com. Please note this event is being recorded.

該公司將舉辦問答會。在準備好的評論結束時，如果您有任何問題想要提交，請發送電子郵件至ir@Charles&Colvard.com。請注意，此事件正在被記錄。

I would now like to turn the conference over to Mr. Dan O'Connell, President and Chief Executive Officer. Please go ahead.

現在，我想將會議交給總裁兼執行長丹·奧康奈爾先生。請繼續。

Good afternoon, everyone, and welcome to our third quarter fiscal 2024 financial results conference call. Fashion industry leaders predicted uncertainty for 2024 amid subdued economic growth, weak consumer confidence and persistent inflation, according to a recent McKenzie report.

大家下午好，歡迎參加我們 2024 財年第三季財務業績電話會議。根據麥肯齊最近的一份報告，時尚產業領袖預測，在經濟成長低迷、消費者信心疲軟和通膨持續的背景下，2024 年將出現不確定性。

And Charles & Colvard continued to experience these challenges during Q3. During the global luxury group, buying fashion houses such as Gucci, Alexander McQueen and others recently reported downward pressures on their top line, citing lingering luxury buying slowdowns and sluggish market conditions.

Charles & Colvard 在第三季繼續面臨這些挑戰。在全球奢侈品集團中，Gucci、Alexander McQueen 等時尚品牌最近報告稱，其營收面臨下行壓力，因為奢侈品購買持續放緩以及市場狀況低迷。

So these trends have impacted us for the last several quarters. We remain optimistic about the company's long-term value as we've seen revenue declines shrink across sequential quarters. Overall, revenue for Q3 was $5.3 million. And while down 21% compared to Q3 FY 2023, that figure is a 12 basis points improvement over the Q1 FY 2024 decline and a 3 basis points improvement over the Q2 FY 2024 decline. We believe that we continue to close the gap and make progress towards profitability.

這些趨勢在過去幾個季度對我們產生了影響。由於我們看到連續幾季的營收降幅縮小，我們對公司的長期價值仍然持樂觀態度。總體而言，第三季的營收為 530 萬美元。雖然與 2023 財年第三季相比下降了 21%，但這一數字比 2024 財年第一季的降幅提高了 12 個基點，比 2024 財年第二季的降幅提高了 3 個基點。我們相信，我們將繼續縮小差距並朝著獲利的方向邁進。

Margin erosion, however, continued during the quarter due we believe to the significant rise in gold pricing, greater promotional pricing pressure amid a deeply discounted retail environment, driving an increased sale cadence and increased demand for Arcadia lab-grown diamond as a percentage of sales on charlesandcolvard.com, elevated shipping costs, a disposition strategy to liquidate some obsolescence, inventory and other inflationary impacts.

然而，我們認為本季利潤率持續下降，原因是黃金價格大幅上漲，在大幅折扣的零售環境下促銷價格壓力加大，推動銷售節奏加快，對 Arcadia 實驗室培育鑽石的需求增加（佔 charlesandcolvard.com 銷售額的比例），運輸成本上升，清算部分過時庫存的處置策略和其他通膨影響。

We are working to mitigate additional margin creep and stabilize product margins by reviewing our vendor agreements and relationships and negotiating when possible to reduce cost of goods sold, evaluating our overall product assortment and mindfully, managing our overall advertising and marketing spend.

我們正在努力透過審查我們的供應商協議和關係並在可能的情況下進行協商以降低銷售成本、評估我們的整體產品組合以及謹慎管理我們的整體廣告和行銷支出來減輕額外的利潤率攀升並穩定產品利潤率。

While the current environment, we're encouraged by the opportunities that conscious consumerism and ethical manufacturing awareness create for Charles & Colvard and our forward momentum on our strategic initiatives.

在當前環境下，我們有意識的消費主義和道德製造意識為 Charles & Colvard 創造的機會以及我們策略舉措的前進動力令我們感到鼓舞。

Forever One, the company's Cornerstone and Pinnacle lab-grown voice and a gemstone product brand saw revenues increased 5% compared to Q3 FY 2023, while KDL lab-grown diamond sales and Charles & Colvard were up 16% compared to the year ago quarter.

該公司旗下 Cornerstone 和 Pinnacle 實驗室培育聲音和寶石產品品牌 Forever One 的收入與 2023 財年第三季度相比增長了 5%，而 KDL 實驗室培育鑽石銷售額和 Charles & Colvard 的收入與去年同期相比增長了 16%。

We believe we're well positioned to capitalize on increased consumer awareness of lab-grown gems, particularly moissanite and lab-grown diamonds. As more brands and retailers continue to embrace the lab grown movement.

我們相信，我們有能力利用消費者對實驗室培育寶石（尤其是莫桑石和實驗室培育鑽石）的認識不斷提高的機會。隨著越來越多的品牌和零售商繼續接受實驗室培育運動。

Prada joined LVMH brands Fred and TAG Heuer as one of the first high jewelry houses to adopt lab grown gems launching a collection featuring lab-grown diamonds and recycled gold last year. We feel that the wider acceptance of lab grown diamonds and recycled metals further validates that Charles & Colvard made not mind story.

普拉達 (Prada) 加入了 LVMH 旗下品牌 Fred 和 TAG Heuer 的行列，成為首批採用實驗室培育寶石的高級珠寶品牌之一，並於去年推出了以實驗室培育鑽石和再生黃金為特色的系列產品。我們認為，實驗室培育鑽石和再生金屬的廣泛接受進一步證實了 Charles & Colvard 並沒有介意這個故事。

Additionally, we've re-branded moissanite by Charles & Colvard to our newest gem brand for Everbright to further distinguish our premium moissanite gemstones in the market. For Everbright moissanite will replace moissanite by Charles & Colvard's listings on our drop-ship and marketplace partner sites, including Macys.com, Belk.com, Kohls.com, FredMeyerjewelers.com, ShopMyexchange.com, the Army and Air Force Exchange services online store and others. The new gemstone brand will also be available for purchase by approved independent jewelers and retailers on charlesandcolvarddirect.com, a downstream solution for value-oriented consumers seeking quality synonymous with Charles & Colvard moissanite at lower price points to broaden our overall reach.

此外，我們已將 Charles & Colvard 的莫桑石重新命名為 Everbright 的最新寶石品牌，以進一步在市場上區分我們的優質莫桑石寶石。Everbright 莫桑石將取代 Charles & Colvard 在我們的直銷和市場合作夥伴網站上列出的莫桑石，包括 Macys.com、Belk.com、Kohls.com、FredMeyerjewelers.com、ShopMyexchange.com、陸軍和空軍交易服務線上商店等。經批准的獨立珠寶商和零售商也可在 charlesandcolvarddirect.com 上購買新寶石品牌，這是針對注重價值的消費者的下游解決方案，他們尋求以較低的價格獲得與 Charles & Colvard 莫桑石同等品質的寶石，從而擴大我們的整體影響力。

Inventory decreased 24% for the quarter as the company continued to refine its jewelry offerings in response to consumer preferences. On charles&colvard.com the company expanded engagement in fashion jewelry categories in both Forever One moissanite and Caydia lab-grown diamond product brands during the quarter.

由於公司根據消費者喜好不斷改進其珠寶產品，本季庫存減少了 24%。本季度，該公司在 charles&colvard.com 上擴大了 Forever One 莫桑石和 Caydia 實驗室培育鑽石產品品牌在時尚珠寶類別中的參與度。

To better penetrate the low cost consumer market and capture additional market share the company updated its moissaniteoutlet.com website with improved item filters for a better user experience, a fresh look and feel refreshed assortment and increased frequency of its marketing campaigns and emails.

為了更好地滲透低成本消費市場並佔領更多市場份額，該公司更新了其 moissaniteoutlet.com 網站，改進了商品過濾器，以提供更好的用戶體驗、全新的外觀和感覺、更新的商品種類，並增加了行銷活動和電子郵件的頻率。

The company continued to make significant investments in its people resources, its next generation web platform and its marketing and advertising assets and capabilities with what we deem to be essential for a lifestyle brand to better align with consumers in a crowded and competitive environment.

該公司繼續對人力資源、下一代網路平台以及行銷和廣告資產和能力進行大量投資，我們認為這些對於生活方式品牌在擁擠和競爭的環境中更好地與消費者保持一致至關重要。

Keeping us top of mind with more concentrated social media campaigns, refreshed evergreen assets across paid media platforms and new brand ambassador ships such as the recently announced strategic partnership with American actress Skyler Samuels, Erin Lim of host of E. The rundown, Don Caydia lab-grown diamonds on the red carpet for the People's Choice Awards in February.

透過更集中的社交媒體活動、在付費媒體平台上更新的常青資產以及新的品牌大使關係（例如最近宣布與美國女演員 Skyler Samuels、E 主持人 Erin Lim 建立戰略合作夥伴關係）讓我們始終處於首要位置。簡單介紹一下，Don Caydia 在 2 月人民選擇獎的紅毯上佩戴了實驗室培育鑽石。

And the company's successful Valentine's Day sale comprised 52% of charles&colvard.com's revenue for the quarter. We strategically incorporate more user-generated content this quarter as we have seen positive results from the company's paid search and paid social campaigns by implementing these new assets.

該公司成功的情人節銷售佔 charles&colvard.com 本季營收的 52%。本季度，我們策略性地整合了更多用戶生成內容，因為透過實施這些新資產，我們看到了公司付費搜尋和付費社交活動的正面成果。

In Q3, the company launched an ethical consumerism campaign across its digital marketing efforts, focusing on Charles & Colvard's made online story. We believe our increased digital marketing efforts and e-commerce presence enable us to reach a broader audience and drive more customers online to more places consumers can reach Charles & Colvard. The stronger the company's brand equity can become.

在第三季度，該公司透過數位行銷活動發起了一場道德消費主義活動，重點關注 Charles & Colvard 的線上故事。我們相信，我們增加數位行銷力度和電子商務影響力，使我們能夠接觸到更廣泛的受眾，並吸引更多線上客戶到更多消費者可以接觸到 Charles & Colvard 的地方。公司的品牌資產就會越強大。

Showcasing our quality, craftsmanship and innovation, thereby seeking to capture greater market share. Bottom line, we believe that our marketing efforts are gaining traction. We continue to beta test our Made shopping, broadcast and streaming initiatives. Gleaning valuable insights into a new customer base, while recognizing a lift in top of funnel brand awareness.

展現我們的品質、工藝和創新，從而尋求佔領更大的市場份額。總而言之，我們相信我們的行銷努力正在獲得成功。我們將繼續對我們的 Made 購物、廣播和串流媒體計劃進行 Beta 測試。收集新客戶群的寶貴見解，同時認識到通路頂部品牌知名度的提升。

We have recently begun to scale back spending while effectively fine-tuning the programming to appeal to optimal markets for our products. We look forward to updating you with further Made shopping plans in more detail on future calls as we believe this network will enable us to cross more verticals beyond the jewelry and gemstone industry.

我們最近開始削減開支，同時有效地調整節目，以吸引最適合我們產品的市場。我們期待在未來的電話會議中向您更詳細地介紹進一步的 Made 購物計劃，因為我們相信這個網絡將使我們能夠跨越珠寶和寶石行業以外的更多垂直領域。

As we look to hedge against the pricing pressures that continue to impact the jewelry and gemstone industry as well as our traditional segment. We believe that the new launch of our charlesandcolvarddirect.com wholesale portal enables the company to be more competitive while incentivizing independent jewelers and retailers to buy direct in support of this initiative.

我們希望對沖持續影響珠寶和寶石產業以及傳統產業的價格壓力。我們相信，新推出的 charlesandcolvarddirect.com 批發入口網站將使公司更具競爭力，同時激勵獨立珠寶商和零售商直接購買以支持這項舉措。

We launched the trade campaign announcing Charles & Colvard direct website with biweekly newsletter ads on JCK.com, a leading industry website publication. We partnered with JCK to send a dedicated email to more than 30,000 independent jewelers and retailers announcing Charles & Colvard direct.

我們啟動了貿易活動，宣佈在 Charles & Colvard 直銷網站上發布雙週新聞通訊廣告，該網站是領先的行業網站出版物 JCK.com。我們與 JCK 合作，向超過 30,000 家獨立珠寶商和零售商發送了一封專門的電子郵件，宣布 Charles & Colvard 直銷。

We revamped the Charles & Colvard direct.com website with updated marketing assets and simple to use account registration and most recently, we issued a press release announcing the strategic shift with our traditional segments. I firmly believe while we face challenges within our industry, we are confident that our team's agility in the face of adversity will guide us towards success and growth.

我們改進了 Charles & Colvard direct.com 網站，更新了行銷資產並簡化了帳戶註冊操作，最近，我們發布了一份新聞稿，宣布了我們傳統部門的策略轉變。我堅信，雖然我們面臨業界的挑戰，但我們相信，我們團隊在逆境中的敏捷反應將引導我們走向成功和成長。

I will now turn the presentation over to Clint Pete, our CFO, to provide detailed insight into our financial performance during Q3. Clint. please proceed.

現在，我將把演示交給我們的財務長 Clint Pete，以詳細介紹我們第三季的財務表現。克林特。請繼續。

Thanks, Dan. Today I'll provide a summary of key financials for the third quarter ended March 31, 2024. Additional details can be found in our earnings press release that we issued this afternoon and our Form 10-Q, which we expect to file early next week. Please note that all percentage comparisons are to the third quarter ended March 31, 2023, unless specified otherwise.

謝謝，丹。今天，我將提供截至 2024 年 3 月 31 日的第三季主要財務狀況摘要。更多詳細資訊請參閱我們今天下午發布的收益新聞稿和我們預計將於下週初提交的 10-Q 表。請注意，除非另有說明，所有百分比比較均與截至 2023 年 3 月 31 日的第三季進行比較。

First, we'll start on slide 8 with a comparative analysis of the third quarter of fiscal 2024 compared to same period one year ago.

首先，我們將從第 8 張投影片開始，對 2024 財年第三季與去年同期進行比較分析。

In total, net sales for Q3 2024 totaled $5.3 million versus $6.6 million, a decrease of 21% due primarily to the continued weak consumer confidence, continued pricing pressures on the lab grown diamond market, and the expected decline in the company's wholesale revenue as we continue to build a more robust direct-to-consumer business. And as our independent dealer and retailer initiative of charlesandcolvarddirect.com continues to mature.

總體而言，2024 年第三季的淨銷售額為 530 萬美元，而去年同期為 660 萬美元，下降了 21%，主要原因是消費者信心持續疲軟、實驗室培育鑽石市場持續面臨價格壓力，以及隨著我們繼續打造更強勁的直接面向消費者的業務，公司批發收入預計會下降。隨著我們的獨立經銷商和零售商計劃 charlesandcolvarddirect.com 不斷成熟。

Net sales for our Online Channels segment, which is primarily direct to consumer and includes charlesandcolvard.com, merchandiseoutlet.com, charlesandcolvarddirect.com, madeshopping.com marketplaces, Drop Ship Retail and other pure-play outlets totaled $4.1 million for the quarter now representing 77% of total net sales, up 7% from a year ago.

我們的線上通路部門淨銷售額本季總計 410 萬美元，佔總淨銷售額的 77%，比去年同期成長 7%，該部門主要直接面向消費者，包括 charlesandcolvard.com、merchandiseoutlet.com、charlesandcolvarddirect.com、madeshopping.com 市場、Drop Ship Retail 和其他純銷售點。

Net sales for our traditional segment, which consists of wholesale and brick-and-mortar customers totaled $1.2 million for the quarter, representing now 22% of total net sales compared to 30% of sales in the year-ago quarter. Finished jewelry net sales represent 93% of total sales in the quarter, up from 80% of sales in the third quarter one year ago.

本季度，我們傳統部門（包括批發和實體客戶）的淨銷售額總計 120 萬美元，佔總淨銷售額的 22%，而去年同期比例為 30%。成品珠寶淨銷售額佔本季總銷售額的 93%，高於去年同期第三季的 80%。

As previously mentioned, due to the company's strategic shift in its traditional segment strategies finished net sales decreased 71% for the quarter. Domestic sales of charlesandcolvard.com represented 98% of all sales in the third quarter with international sales totaling 2%.

如前所述，由於公司傳統部門策略的轉變，本季淨銷售額下降了 71%。charlesandcolvard.com 的國內銷售額佔第三季總銷售額的 98%，國際銷售額佔 2%。

Moving to slide 9 to discuss gross margin. We reported a gross margin at 23% versus 32% gross margin in the year-ago quarter. A gross profit of $1.2 million versus $2.1 million in gross profit in the year-ago quarter, due in large part to rising commodity prices, the company's sale cadence and a disposition strategy to liquidate some obsolescence inventory.

轉到投影片 9 討論毛利率。我們報告的毛利率為 23%，而去年同期的毛利率為 32%。毛利為 120 萬美元，而去年同期的毛利為 210 萬美元，這在很大程度上是由於商品價格上漲、公司的銷售節奏以及清算部分過時庫存的處置策略。

For Q3 2024, operating expenses increased 13% from the year-ago quarter. Sales and marketing expenses increased 13% to $3.7 million. This increase reflects our continuing investments in people, resources, top of funnel and influencer marketing campaigns and brand awareness initiatives that we believe allow us to elevate our brands position.

2024 年第三季度，營運費用較去年同期成長 13%。銷售和行銷費用成長 13% 至 370 萬美元。這一成長反映了我們對人才、資源、通路頂端和影響力行銷活動以及品牌知名度計畫的持續投資，我們相信這些投資能夠提升我們的品牌地位。

General and administrative expenses were $1.2 million for the quarter compared to $1.1 million in the year-ago quarter, a 14% increase. The increase in G&A for Q3 2024 was due in large part to increased legal fees compared to the prior year quarter. We reported a net loss for Q3 2024 $3.6 million or $0.12 loss per diluted share, compared with a net loss of $8.4 million or $0.28 loss per diluted share in the year-ago period.

本季的一般及行政開支為 120 萬美元，去年同期為 110 萬美元，成長 14%。2024 年第三季的 G&A 費用增加主要是因為與去年同期相比法律費用增加。我們報告 2024 年第三季淨虧損為 360 萬美元，即每股攤薄虧損 0.12 美元，而去年同期淨虧損為 840 萬美元，即每股攤薄虧損 0.28 美元。

The main driver for our decreased net loss was $6.3 million tax expense in the year-ago quarter, driven by the establishment of a deferred tax asset valuation allowance on our debt deferred tax assets.

我們淨虧損減少的主要原因是去年同期的 630 萬美元稅費，這歸因於我們在債務遞延稅項資產上設立了遞延稅項資產估值準備金。

Our weighted average shares outstanding on a diluted basis used in the calculation of loss per share for the quarter were approximately 30.3 million shares for the period ended March 31, 2024, same as in the year ago period.

截至 2024 年 3 月 31 日的季度，用於計算每股虧損的稀釋後加權平均流通股數約為 3,030 萬股，與去年同期相同。

Now let's move on to a snapshot of our balance sheet. Our liquidity and capital position remained strong as we ended the quarter with $9.2 million of total cash compared to $11.1 million at the end of Q2. Working capital remained strong at $12.7 million.

現在讓我們來看看資產負債表的快照。我們的流動性和資本狀況依然強勁，本季末我們的現金總額為 920 萬美元，而第二季末為 1,110 萬美元。營運資金依然強勁，達到 1,270 萬美元。

As of March 31, 2024, the company had $500,000 in short-term outstanding debt. Our cash flow used in operations was $2.1 million during the quarter, compared to $800,000 of cash flow used in operations in the same quarter a year ago.

截至 2024 年 3 月 31 日，該公司的短期未償還債務為 50 萬美元。本季我們的營運現金流為 210 萬美元，而去年同期的營運現金流為 80 萬美元。

In terms of other liquidity, we have access to our $5 million cash secured credit facility with JPMorgan Chase Bank. As of March 31, 2024, the company had $500,000 outstanding on the credit facility. Inventory as of March 31, 2024, totaled $25.3 million compared to June 30, 2023, when it totaled $26.8 million, compared to $33.3 million at March 31, 2023, a year-over-year decrease of $8 million due to inventory write-down in Q4 FY 2023.

在其他流動資金方面，我們可以獲得摩根大通銀行提供的 500 萬美元現金擔保信貸額度。截至 2024 年 3 月 31 日，該公司未償還的信貸額度為 50 萬美元。截至 2024 年 3 月 31 日的庫存總額為 2530 萬美元，而 2023 年 6 月 30 日的庫存總額為 2680 萬美元，而 2023 年 3 月 31 日的庫存總額為 3330 萬美元，同比減少 800 萬美元，原因是第四季度庫存 200 萬美元。

Boost jewels inventory was $8.2 million as of March 31, 2024, compared to $9.1 million as of June 30, 2023, and compared to $15.6 million as of March 31, 2023. A year-over-year decrease, again due to the inventory write-down we referred to above.

截至 2024 年 3 月 31 日，Boost 珠寶庫存為 820 萬美元，而截至 2023 年 6 月 30 日為 910 萬美元，截至 2023 年 3 月 31 日為 1,560 萬美元。與去年同期相比有所下降，同樣是由於我們上面提到的庫存減記。

Finished jewelry inventory was $16.9 million as of March 31, 2024, compared to $17.3 million as of June 30, 2023, and compared to $17.4 million as of March 31, 2023.

截至 2024 年 3 月 31 日，成品珠寶庫存為 1,690 萬美元，而截至 2023 年 6 月 30 日為 1,730 萬美元，而截至 2023 年 3 月 31 日為 1,740 萬美元。

Company remains focused on prudent inventory management strategies and support of our in-stock requirements with select drop-ship marketplace partners.

公司仍然專注於審慎的庫存管理策略以及透過精選的直銷市場合作夥伴來支持我們的庫存需求。

Book value per share at the end of the third quarter was $1.01 per share trading well below market. In summary, I remain confident in our continued efforts to increase shareholder value and brand equity.

第三季末每股帳面價值為 1.01 美元，遠低於市場價格。總而言之，我對我們持續努力提高股東價值和品牌資產充滿信心。

With that, I'll turn it back over to Dan.

說完這些，我就把麥克風交還給丹。

Thank you, Clint. As we approach our fiscal year end, our focus remains steadfast on launching key initiatives while diligently working to navigate the challenge of reducing expenses while driving revenue. By leveraging our resources more efficiently and better maximizing our efforts. We are committed to achieving sustainable growth and delivering value to our stakeholders.

謝謝你，克林特。隨著財政年度結束的臨近，我們的重點依然堅定不移地放在啟動關鍵措施上，同時努力應對減少開支、增加收入的挑戰。透過更有效地利用我們的資源並更好地最大化我們的努力。我們致力於實現永續成長並為利害關係人創造價值。

With the collective dedication to innovation and operational excellence, we believe we are poised to capitalize on the opportunities we've created and to overcome challenges as we chart a successful path forward. Thank you for your unwavering support as we continue this journey together.

我們相信，憑藉對創新和卓越營運的共同奉獻，我們已準備好利用我們創造的機遇，克服挑戰，走上成功的前進之路。感謝您在我們共同繼續這趟旅程時給予的堅定支持。

With that, I'll turn the call back over to the operator to open the lines for any questions.

說完這些，我會將電話轉回給接線生，以便解答任何問題。

(Operator Instructions)

（操作員指示）

Bruce Lindenman, Investor.

布魯斯·林登曼，投資者。

Hi. Do you still have your stock buyback on in-place? And are you still -- the management buying stock back -- buying stock personally?

你好。您的股票還進行原廠回購嗎？管理階層還在回購股票嗎？還是您親自買股票？

Hi, Bruce. Yes, if you look at the last historical purchases, when we had the ability to purchase and it wasn't a quiet period, you'll look at the directors inclusive of myself that bought significant amount of shares recently.

你好，布魯斯。是的，如果你查看最近的歷史購買情況，當我們有能力購買並且那不是一個平靜的時期時，你會看到包括我在內的董事最近購買了大量股票。

Do you think you'll continue that.

你認為你會繼續這樣做嗎？

Certainly we believe that this is an opportunity at these prices. So, that is the first part of it. The second part is in relation to the stock buyback repurchase program. We currently have, I believe, $4.5 million left within the repurchase program to be able to buy.

當然，我們相信，以這樣的價格，這是一個機會。這就是第一部分。第二部分涉及股票回購回購計畫。我認為，我們目前的回購計畫中還剩下 450 萬美元可供購買。

Are you gentlemen going to buy back stock at a sort of book value here?

先生們，你們會以某種帳面價值回購股票嗎？

Well, that's a, an executive decision that is always contemplated on a daily basis. So we certainly believe that we're trading way below book, and we believe that it's a wise move in capital. One thing, just to be very clear, we want to make sure that we maintain liquidity, we want to make sure that we have the cash to be able to operate the business and we want to make sure that we complete a lot of these initiatives that we had initiated and we're funding. So we weigh all these things on a daily basis.

嗯，這是一個每天都需要考慮的行政決策。因此，我們確實相信我們的交易價格遠低於帳面價值，而且我們相信這是明智的資本舉措。有一件事要明確，我們要確保我們保持流動性，我們要確保我們有足夠的現金來運營業務，我們要確保我們完成我們已經發起和資助的許多計劃。所以我們每天都會權衡所有這些事情。

At what point do you think the company could at least turn cash flow positive in terms of your business?

就您的業務而言，您認為公司何時至少可以實現現金流為正？

Yes. I mean, we don't give forward looking statements, but I will tell you that we're completing a lot of the goals and initiatives that we put forth in the last few quarters, kind of building out capabilities, content capabilities, marketing strategy. A lot of the spend as of late has been on performance, marketing and so forth. So that really is something that we need to kind of look at and we need to do a better job and kind of getting a return on our ad spend. So we're looking at that diligently. But look to us to wind down and start to really we look for the path to profitability now.

是的。我的意思是，我們不做前瞻性陳述，但我可以告訴你，我們正在完成過去幾個季度提出的許多目標和計劃，包括建立能力、內容能力和行銷策略。最近的大部分支出都用於績效、行銷等方面。所以這確實是我們需要研究的事情，我們需要做得更好，並獲得廣告支出的回報。因此我們正在認真研究這個問題。但現在我們要放慢腳步，開始真正尋找獲利之路。

So as we were in the last couple of quarters, we've been kind of building and making these investments to be able to build out what we believe is the future state of the company and what we believe is necessary to be able to build a next generation company in the long run. So we made strategic investments in our web property. We're building out a new, what we call the next-gen website has unbelievable functionality, a lot better than what we have today. Literally a single point for the consumer to be able to click and buy any shape, any size, any configuration between the actual piece of jewelry they're buying. That's really important. They can pick whatever color they want.

因此，就像我們在過去幾個季度一樣，我們一直在進行這些建設和投資，以便能夠建立我們認為的公司的未來狀態以及我們認為從長遠來看建立下一代公司所必需的東西。因此，我們對我們的網路資產進行了策略性投資。我們正在建立一個新的網站，我們稱之為下一代網站，它具有令人難以置信的功能，比我們現在擁有的網站好得多。實際上，消費者只需點擊一下即可購買他們想要購買的任何形狀、任何尺寸、任何配置的實際珠寶。這真的很重要。他們可以選擇任何他們想要的顏色。

So we believe that investment was very strategic and very critical. It's taken us a little bit longer than we anticipated to be able to kind of launch that. But we stated on the last call that we'd be launching in Q4. So that still is the target to once we get that launch, we get it up and running. The spend will level out a little bit there. And then we believe that's probably the most significant driver for future growth for us. And then that will get us really to the path to profitability because we'll start to save dollars there and economies of scale.

因此，我們認為這項投資非常具有戰略意義，而且非常關鍵。我們花了比預期更長的時間才能夠推出這個產品。但我們在上次電話會議上表示，我們將在第四季推出。因此，這仍然是我們的目標，一旦啟動，我們就會啟動並運行它。那裡的支出將會稍微平穩一些。我們相信這可能是我們未來成長最重要的驅動力。這樣我們就能真正走上獲利之路，因為我們將開始在那裡節省資金並實現規模經濟。

So the new next-gen property will enable us to peel off a lot of these. And for all intents and purposes, APIs or third party resources and partnerships that we have that we will need once we launch the next-gen platform. So that will help us also to become more profitable in the long run. So we're pretty excited about getting this thing up and running and feeling the benefits in the cost savings.

因此，新的下一代屬性將使我們能夠剝離其中的許多內容。無論出於何種目的，一旦我們推出下一代平台，我們就需要 API 或第三方資源和合作夥伴關係。長遠來看這也將有助於我們獲得更多利潤。因此，我們非常高興能夠啟動並運行這個系統，並感受到成本節約帶來的好處。

Do -- have you discussed or tried to form any partnerships in terms of companies that you sell through invest in the company or to help you with any of this stuff in terms of finance?

您是否討論過或嘗試過建立任何合作夥伴關係，透過投資公司來銷售產品，或在財務方面幫助您處理這些事情？

Yes. I mean, as always --

是的。我的意思是，一如既往--

So much cash every quarter.

每個季度都有這麼多現金。

No, I mean that's no question, right. So for us, these are investments. That's the way we look at it right now. I mean, we knew the horizon for us to peel back these investments and we knew what we wanted to be kind of focused on and strategically spending the dollars where we needed to spend them. So that actually is starting to come down.

不，我的意思是那毫無疑問，對吧。所以對我們來說，這些都是投資。這就是我們現在看待這個問題的方式。我的意思是，我們知道剝離這些投資的範圍，我們知道我們想要專注於什麼，並策略性地將資金花在我們需要花的地方。所以這個數字其實已經開始下降了。

But certainly everyday we have a lot of conversations between partners out there. I mean, we've been in the jewelry industry for a long time. There's certainly a lot of viable partnerships, alliances or things that could be and could come to fruition. But at this point, there's nothing to be spoken about in that.

但可以肯定的是，我們每天與合作夥伴之間都會進行許多對話。我的意思是，我們從事珠寶行業已經很長一段時間了。確實有很多可行的夥伴關係、聯盟或事情可以實現並且可能取得成果。但就目前而言，這還沒有什麼好談的。

I just like to see something happen or good or before you guys run out of money?

我只是想看到一些好事發生，或者在你們的錢用完之前？

So let's talk about that. You want to talk about the liquidity. So given the fact that we have -- and thank you for bringing that up. So we have $9.2 million in cash at the end of the quarter. We certainly had the credit line capability and have the capabilities drawn that. We believe that our inventory in finished jewelry is comprised of really valuable inventory.

那我們來談談這個吧。您想談論流動性。所以考慮到事實我們已經——謝謝你提出這個問題。因此，本季末我們擁有 920 萬美元現金。我們當然有信用額度能力，並且有能力提取信用額度。我們相信，我們的成品珠寶庫存是真正有價值的庫存。

So that means active inventory. That means finished jewelry inventory that means a large portion of that inventory contains the commodity in the metals gold rate. So I don't mean to say to anybody right now, but gold is really rising and climbing and as you know, it has an adverse effect on new orders that are priced at a prior gold price. And then as a benefit when the inventory that we have, that's been on the shelf, the valuation that inventory increases to the current market. So we know that if you just said, we wanted to raise capital or we wanted to get more liquid, we would sell off the finished jewelry first.

這意味著活躍庫存。這意味著成品珠寶庫存意味著庫存的很大一部分包含金屬黃金價格中的商品。所以我現在不想告訴任何人，但金價確實在上漲，而且如你所知，這對以之前的金價定價的新訂單產生了不利影響。然後，當我們的庫存上架時，其好處是庫存的估價會增加到當前市場。所以我們知道，如果您剛才說，我們想籌集資金或我們想獲得更多流動性，我們會先賣掉成品珠寶。

Then the other thing I want to point out is on Charles & Colvard Direct is a real new initiative for us to be able to control our destiny. We started moving more toward direct to consumer, but as of late, we realized the fact that we've got over $8.2 million in loose jewels and loose gems. So that's another avenue for us to raise capital or generate some more cash.

然後我想指出的另一件事是 Charles & Colvard Direct 是一個真正的新舉措，讓我們掌控自己的命運。我們開始更多地轉向直接面向消費者，但最近，我們意識到我們已經擁有超過 820 萬美元的散裝珠寶和寶石。所以這是我們籌集資金或產生更多現金的另一條途徑。

So look to us to kind of build out and lean in on that and going after the trade for loose jewels, I know it's been my messaging quarter-over-quarter to go more direct to consumer. That hasn't wavered and that hasn't changed at all. The different is now we're going to go Charles & Colvard direct with this portal and be able to tap thousands of independent retailers. So and those retailers will buy the loose jewels and therefore, we'll be able to convert it to cash.

因此，希望我們能夠擴大規模並依靠這一點，並追求散裝珠寶的交易，我知道這是我每個季度都在傳達的訊息，即更直接地面向消費者。這一點沒有動搖，也沒有發生任何改變。不同的是，現在我們將透過該入口網站直接與 Charles & Colvard 合作，並能夠接觸數千家獨立零售商。因此，那些零售商會購買散裝珠寶，因此，我們能夠將其兌換成現金。

Ben Franklin, Riverstyx Capital.

班·富蘭克林，Riverstyx Capital。

I just have one question. Why draw on the credit facility considering the high cash balance?

我只有一個問題。考慮到現金餘額很高，為什麼還要動用信貸額度？

Yes, that's that's a good question. So we're making I mean -- we only drew the $0.5 million, we felt that we wanted to draw down. I mean, we haven't used the credit facility since we've been in operation here and for several years. So we want to make sure that the credit facility should we want to draw on is available and everything flows in and out the way it does. Certainly the money factor there is very fractional so to preserve cash, sometimes it's in and out. It really depends. So we just wanted to go ahead and draw on it. So we thought it was a good thing for us to do at the time.

是的，這是個好問題。所以我們的意思是——我們只提取了 50 萬美元，我們覺得我們想要提取下來。我的意思是，自從我們在這裡運作以來，我們已經有好幾年沒有使用過信貸額度了。因此，我們希望確保我們能夠獲得所需的信貸額度，並且一切資金都能以正常的方式流入和流出。當然，那裡的貨幣因素非常分散，因此為了保留現金，有時會進出。這確實取決於情況。所以我們只是想繼續利用它。所以我們當時認為這對我們來說是件好事。

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Dan O'Connell, President and Chief Executive Officer for any closing remarks. Please go ahead.

我們的問答環節到此結束。我想將會議交還給總裁兼執行長丹·奧康奈爾先生，請他致閉幕詞。請繼續。

Thank you, Chuck. I just want to thank you for your support of Charles & Colvard. We look forward to continuing updates for our shareholders in future quarters. I want to thank everyone support, and we'll talk to you next quarter, and we look forward to telling you some great things that are coming forward.

謝謝你，查克。我只是想感謝您對 Charles & Colvard 的支持。我們期待在未來幾季繼續為股東提供最新消息。我要感謝大家的支持，我們將在下個季度與您交談，我們期待告訴您一些即將發生的偉大的事情。

The 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。您現在可以斷開連線。