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8-K - FORM 8-K - CROWN CRAFTS INC | c11966e8vk.htm |
Exhibit 99.1
For Immediate Release | February 9, 2011 |
Crown Crafts Reports Continued Top-Line Growth
in Third Quarter and Nine-Month Period of Fiscal 2011
in Third Quarter and Nine-Month Period of Fiscal 2011
| Net sales up 6.3% in third quarter, 4.5% in nine-month period of fiscal 2011 |
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| Adjusted EBITDA and Net Income down in third quarter, up for the nine months |
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| Sales from Company-branded products increase by 22.9% during the third quarter |
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| Company increases quarterly dividend by 50% to $0.03 per share as the outlook for
future cash flow from operations remains strong |
Gonzales, Louisiana Crown Crafts, Inc. (NASDAQ-CM: CRWS) today reported operating results for
the fiscal 2011 third quarter and nine-month period ended December 26, 2010.
We continued to enjoy steady customer demand, as well as positive market response to our new
designs across our various product lines in the third quarter, said E. Randall Chestnut, Chairman,
President and Chief Executive Officer. Although our ability to translate our top-line growth into
increased earnings during the quarter was muted by lower gross margins resulting from certain
promotional activities and higher than expected raw material costs, we remain confident in the
strength of our underlying business and the soundness of our long-range growth strategy as evident
in our solid nine-month results.
Financial Results
Net income for the third quarter of fiscal 2011 was $775,000, or $0.08 per diluted share, on net
sales of $21.9 million, compared with net income of $1.1 million, or $0.12 per diluted share, on
net sales of $20.6 million for the third quarter of fiscal 2010. Although one of the Companys
major retail customers delayed some of its regular orders to adjust its inventory levels, the
Companys net sales nevertheless grew during the quarter primarily as a result of promotional sales
to that customer. Record high raw material costs, primarily cotton, as well as increases in labor,
transportation and currency costs associated with the Companys operations in China, had a negative
impact on the Companys net income and earnings per diluted share.
From a timing standpoint, we were limited in our ability to pass along these higher costs during
the third quarter, said Chestnut. We do not expect that to be the case in future quarters.
916 S. Burnside Avenue * PO Box 1028 * Gonzales, LA 70707-1028 * (225) 647-9100 * Fax (225) 647-9104
The Companys net sales of its branded products, most notably the NoJo brand of infant bedding,
blankets and accessories, increased by 22.9% and 24.1% over the third quarter and nine-month
periods of fiscal 2010, respectively. We are quite pleased with the strong response our
fashion-forward designs are having with consumers at major retailers across the country, added
Chestnut. Driving revenue growth and margin expansion through our creative and well-crafted
branded products will continue to be a point of strategic emphasis for us going forward.
The Companys Adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization,
costs associated with the proxy contest related to the 2010 annual meeting of stockholders and
compensation costs related to non-vested stock awarded to certain employees in fiscal 2011) for the
third quarter of fiscal 2011 was approximately $1.8 million, compared with $2.3 million in the
third quarter of fiscal 2010. The decrease was primarily due to the lower gross margins resulting
from promotional sales and the increase in costs noted above.
Net income for the fiscal 2011 nine-month period was $2.7 million, or $0.28 per diluted share, on
net sales of $62.8 million, compared with net income of $2.5 million, or $0.26 per diluted share,
on net sales of $60.1 million in the fiscal 2010 nine-month period. The Companys year-to-date
Adjusted EBITDA for fiscal 2011 increased to $6.5 million, compared with $5.9 million in the
similar period of fiscal 2010.
Declaration of Quarterly Cash Dividend
The Company also announced today that its Board of Directors has declared a regular quarterly cash
dividend on the Companys Series A common stock of $0.03 per share. The dividend, payable on April
8, 2011 to stockholders of record at the close of business on March 11, 2011, represents the fifth
consecutive quarterly dividend since the Company resumed dividend payments after a 10-year hiatus,
is an increase of 50% over the last four quarterly dividends and provides an annualized yield of
2.4% based on yesterdays closing price of $5.06 per share. The Boards decision to increase the
quarterly dividend is a reflection of its continued optimism regarding the Companys long-range
growth potential, as well as the strength of our future cash flow from operations, said Chestnut.
Conference Call
The Company will host a teleconference today at 1:00 p.m. Central Standard Time to discuss the
Companys results, during which interested individuals will be given the opportunity to ask
appropriate questions. To join the teleconference, dial (877) 317-6789 and refer to conference
number 447834. The teleconference can also be accessed in listen-only mode by visiting the
Companys 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
Companys website.
A telephone replay of the teleconference will be available one hour after the end of the call
through 8:00 a.m. Central Standard Time on February 17, 2011. To access the replay, dial (877)
344-7529 in the United States or (412) 317-0088 from international locations and refer to
conference number 447834.
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About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and distributes infant, toddler and juvenile consumer products,
including crib and toddler bedding and blankets; nursery and bath accessories; reusable and
disposable bibs and floor mats; burp cloths; room décor; and disposable placemats, toilet seat
covers and changing mats. The Companys operating subsidiaries include Crown Crafts Infant
Products, Inc. in California and Hamco, Inc. in Louisiana. Crown Crafts is Americas largest
producer of infant bedding, bibs and bath items. The Companys products include licensed and
branded collections as well as exclusive private label programs for certain of its customers. The
latest news about Crown Crafts can be found at www.crowncrafts.com.
Forward-Looking Statements
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 managements 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 Companys products, changing
competition, changes in the retail environment, the level and pricing of future orders from the
Companys customers, the extent to which the Companys business is concentrated in a small number
of customers, the Companys 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 Companys business, disruptions to transportation
systems or shipping lanes used by the Company or its suppliers, and the Companys dependence upon
licenses from third parties. Reference is also made to the Companys periodic filings with the
Securities and Exchange Commission for additional factors that may impact the Companys 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:
Olivia Elliott
Vice President and Chief Financial Officer
225-647-9124
e-mail: oelliott@crowncrafts.com
Vice President and Chief Financial Officer
225-647-9124
e-mail: oelliott@crowncrafts.com
or
Halliburton Investor Relations
(972) 458-8000
(972) 458-8000
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CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SELECTED FINANCIAL DATA
In thousands, except percentages and per share data
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME
SELECTED FINANCIAL DATA
In thousands, except percentages and per share data
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 26, 2010 | December 27, 2009 | December 26, 2010 | December 27, 2009 | |||||||||||||
Net sales |
$ | 21,938 | $ | 20,646 | $ | 62,816 | $ | 60,094 | ||||||||
Gross profit |
4,407 | 4,638 | 14,353 | 13,121 | ||||||||||||
Gross profit percentage |
20.1 | % | 22.5 | % | 22.8 | % | 21.8 | % | ||||||||
Income from operations |
1,360 | 1,892 | 4,772 | 4,496 | ||||||||||||
Income from continuing operations before income taxes |
1,240 | 1,720 | 4,439 | 3,885 | ||||||||||||
Income tax expense |
460 | 598 | 1,711 | 1,409 | ||||||||||||
Income from continuing operations after income taxes |
780 | 1,122 | 2,728 | 2,476 | ||||||||||||
Loss from discontinued operations net of income
taxes |
(5 | ) | (9 | ) | (13 | ) | (22 | ) | ||||||||
Net income |
775 | 1,113 | 2,715 | 2,454 | ||||||||||||
Basic earnings per share |
$ | 0.08 | $ | 0.12 | $ | 0.29 | $ | 0.27 | ||||||||
Diluted earnings per share |
$ | 0.08 | $ | 0.12 | $ | 0.28 | $ | 0.26 | ||||||||
Weighted Average Shares Outstanding: |
||||||||||||||||
Basic |
9,565 | 9,167 | 9,466 | 9,186 | ||||||||||||
Diluted |
9,786 | 9,271 | 9,631 | 9,287 |
CONSOLIDATED BALANCE SHEETS
SELECTED FINANCIAL DATA
In thousands
SELECTED FINANCIAL DATA
In thousands
December 26, 2010 | ||||||||
(Unaudited) | March 28, 2010 | |||||||
Cash and cash equivalents |
$ | 36 | $ | 75 | ||||
Accounts receivable, net of allowances |
16,468 | 18,021 | ||||||
Inventories |
19,352 | 10,453 | ||||||
Total current assets |
38,703 | 31,474 | ||||||
Intangible assets, net |
8,273 | 7,357 | ||||||
Total assets |
$ | 49,408 | $ | 41,392 | ||||
Current maturities of long-term debt |
$ | 1,917 | $ | 1,952 | ||||
Total current liabilities |
13,773 | 10,657 | ||||||
Long-term debt |
5,666 | 3,238 | ||||||
Shareholders equity |
29,969 | 27,497 | ||||||
Total liabilities and shareholders equity |
$ | 49,408 | $ | 41,392 |
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CROWN CRAFTS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
In thousands, except percentages
(Unaudited)
NON-GAAP RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
In thousands, except percentages
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 26, 2010 | December 27, 2009 | December 26, 2010 | December 27, 2009 | |||||||||||||
Net income |
$ | 775 | $ | 1,113 | $ | 2,715 | $ | 2,454 | ||||||||
Interest expense |
112 | 181 | 334 | 581 | ||||||||||||
Interest income |
| (3 | ) | (2 | ) | (14 | ) | |||||||||
Income tax expense on continuing operations |
460 | 598 | 1,711 | 1,409 | ||||||||||||
Income tax expense (benefit) on discontinued operations |
2 | (4 | ) | (2 | ) | (11 | ) | |||||||||
Depreciation |
64 | 72 | 192 | 220 | ||||||||||||
Amortization |
309 | 347 | 907 | 1,265 | ||||||||||||
Proxy contest costs |
| | 401 | | ||||||||||||
Cost of non-vested stock awarded to certain employees
in fiscal year 2011 |
52 | | 261 | | ||||||||||||
Adjusted EBITDA |
1,774 | 2,304 | 6,517 | 5,904 | ||||||||||||
Net Sales |
21,938 | 20,646 | 62,816 | 60,094 | ||||||||||||
Adjusted EBITDA as a percentage of net sales |
8.1 | % | 11.2 | % | 10.4 | % | 9.8 | % | ||||||||
BASIS FOR THE PRESENTATION OF NON-GAAP FINANCIAL MEASURES
In addition to the Companys disclosure of its financial position and results of operations in
conformity with accounting principles generally accepted in the United States (GAAP), the Company
has also presented certain measures of its historical results of operations which are not
determined in accordance with GAAP. These non-GAAP financial measures include Adjusted EBITDA,
which excludes costs associated with the proxy contest related to the 2010 annual meeting of
stockholders and compensation costs related to non-vested stock awarded to certain employees in
fiscal year 2011. Adjusted EBITDA is used by the Company internally to monitor the Companys
operating results and cash flow and to evaluate the performance of its businesses. The Company
believes that Adjusted EBITDA is useful as an important measure of the Companys results of
operations and as an indicator of its ability to generate cash sufficient to reduce debt, make
strategic acquisitions and investments in capital expenditures, pay dividends and meet its working
capital requirements and other obligations as they become due. The items excluded to calculate
Adjusted EBITDA are significant components that should be considered in understanding and assessing
the Companys financial performance. The non-GAAP financial measures are presented as supplemental
information and should be considered in addition to, and not as a substitute for, the Companys
GAAP financial measures, including its net income, cash flow provided by or used in operating,
investing or financing activities, and other measures of the Companys financial performance and
liquidity. Because non-GAAP financial measures, by definition, are not determined in accordance
with GAAP, there can be significant variations in how companies calculate them. Therefore, the
non-GAAP financial measures presented by the Company may not be comparable to similarly titled
measures of other companies.
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