Exhibit 99.1
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| For Immediate Release
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November 8, 2010 |
Crown Crafts Reports Continued Strong Results in Second Quarter of Fiscal 2011
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Net sales up 9.2% and Adjusted EBITDA climbs 49.0% during the quarter |
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Sales from branded products increases by 33.0% during the period |
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Earnings increase to $0.12 per diluted share in second quarter from $0.08 a year ago |
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Given continued operating momentum, Company reaffirms guidance and declares dividend |
Gonzales, Louisiana — Crown Crafts, Inc. (NASDAQ-CM: CRWS) today reported strong operating results
for the fiscal 2011 second quarter, which ended September 26, 2010.
“In the second quarter of fiscal 2011, we enjoyed steadily increasing customer demand and positive
market response to new designs across our various product lines,” said E. Randall Chestnut,
Chairman, President and Chief Executive Officer of the Company. “Our strong financial results are
a testament to the underlying strength of our product lines and the effectiveness of our innovative
marketing programs, as well as further evidence of the value-creating potential of our growth
strategy and our recent successfully integrated acquisitions.”
Financial Results
Net income for the second quarter of fiscal 2011 was $1.2 million, or $0.12 per diluted share, on
net sales of $23.7 million, compared with net income of $803,000, or $0.08 per diluted share, on
net sales of $21.7 million for the second quarter of fiscal 2010. The Company’s net sales of its
branded products, most notably NoJo, increased by 33.0% over the second quarter of fiscal 2010. The
Company’s Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, costs
associated with the proxy contest related to the 2010 annual meeting of stockholders, compensation
costs related to non-vested stock awarded to certain employees in fiscal year 2011 and an
impairment charge related to an asset held for sale) for the second quarter was $3.0 million, a
49.0% increase over the second quarter of fiscal year 2010.
Net income for the first half of fiscal 2011 was $1.9 million, or $0.20 per diluted share, on net
sales of $40.9 million, compared with net income of $1.3 million, or $0.14 per diluted share, on
net sales of $39.4 million in fiscal 2010. The Company’s year-to-date Adjusted EBITDA for fiscal
2011 increased by $1.1 million to $4.7 million, a 31.7% increase over the same period of fiscal
year 2010.
916 S. Burnside Avenue * PO Box 1028 * Gonzales, LA 70707-1028 * (225) 647-9100 * Fax (225) 647-9104
Outlook
“We enter the second half of fiscal 2011 with strong operating momentum and exciting growth
opportunities before us in both the short and long terms,” said Chestnut. “We will continue to
focus on leveraging our strong brands and quality products into profitable sales growth, both
domestically and abroad, while continuing to strengthen our financial flexibility and free cash
flows.”
Based on its performance to date and current view of the marketplace, the Company reaffirmed its
August 3, 2010 guidance of net income (adjusted to exclude the effect, net of taxes, of the 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) of
$0.64 per diluted share for its fiscal year ending April 3, 2011, an increase of 23.1% from a year
ago. Net sales for fiscal year 2011 are anticipated to reach $95.0 million, an increase of 10.3%
over fiscal year 2010, and Adjusted EBITDA is expected to be $11.8 million for fiscal year 2011, or
12.4% of net sales, which would be a $1.3 million increase over fiscal year 2010.
Declaration of Quarterly Cash Dividend
The Company also today announced that its Board of Directors, at its meeting on November 4, 2010,
declared a regular quarterly cash dividend on the Company’s Series A common stock of $0.02 per
share. The dividend will be paid on December 31, 2010 to stockholders of record at the close of
business on December 10, 2010.
Conference Call
The Company will host a teleconference today at 1:00 p.m. Central Standard Time to discuss the
Company’s results and earnings guidance, 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 445454. 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 8:00 a.m. Central Standard Time on November 16, 2010. To access the replay, dial (877)
344-7529 in the United States or (412) 317-0088 from international locations and refer to
conference number 445454.
-2-
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 Company’s operating subsidiaries include Crown Crafts Infant
Products, Inc. in California and Hamco, Inc. in Louisiana. Crown Crafts is America’s largest
producer of infant bedding, bibs and bath items. The Company’s 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 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 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:
Olivia Elliott
Vice President and Chief Financial Officer
225-647-9124
oelliott@crowncrafts.com
or
Halliburton Investor Relations
(972) 458-8000
-3-
CROWN CRAFTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SELECTED FINANCIAL DATA
In thousands, except percentages and per share data
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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September 26, 2010 |
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September 27, 2009 |
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September 26, 2010 |
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September 27, 2009 |
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Net sales |
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$ |
23,711 |
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$ |
21,713 |
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$ |
40,878 |
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$ |
39,448 |
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Gross profit |
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5,655 |
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4,508 |
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9,946 |
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8,483 |
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Gross profit percentage |
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23.8 |
% |
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20.8 |
% |
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24.3 |
% |
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21.5 |
% |
Income from operations |
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2,136 |
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1,515 |
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3,412 |
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2,604 |
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Income from continuing operations before income taxes |
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2,013 |
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1,266 |
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3,199 |
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2,165 |
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Income tax expense |
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796 |
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471 |
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1,251 |
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811 |
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Income from continuing operations after income taxes |
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1,217 |
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795 |
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1,948 |
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1,354 |
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(Loss) income from discontinued operations — net of
taxes |
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(3 |
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8 |
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(8 |
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(13 |
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Net income |
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1,214 |
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803 |
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1,940 |
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1,341 |
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Basic earnings per share |
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$ |
0.13 |
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$ |
0.09 |
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$ |
0.21 |
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$ |
0.15 |
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Diluted earnings per share |
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$ |
0.12 |
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$ |
0.08 |
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$ |
0.20 |
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$ |
0.14 |
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Weighted Average Shares Outstanding: |
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Basic |
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9,587 |
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9,182 |
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9,417 |
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9,196 |
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Diluted |
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9,748 |
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9,384 |
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9,555 |
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9,381 |
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CONSOLIDATED BALANCE SHEETS
SELECTED FINANCIAL DATA
In thousands
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September 26, 2010 |
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(Unaudited) |
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March 28, 2010 |
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Cash and cash equivalents |
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$ |
13 |
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$ |
75 |
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Accounts receivable, net of allowances |
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15,905 |
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18,021 |
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Inventories |
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17,620 |
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10,453 |
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Total current assets |
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36,266 |
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31,474 |
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Intangible assets, net |
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8,576 |
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7,357 |
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Total assets |
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$ |
47,249 |
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$ |
41,392 |
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Current maturities of long-term debt |
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$ |
1,883 |
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$ |
1,952 |
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Total current liabilities |
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12,240 |
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10,657 |
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Long-term debt |
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5,850 |
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3,238 |
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Shareholders’ equity |
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29,159 |
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27,497 |
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Total liabilities and shareholders’
equity |
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$ |
47,249 |
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$ |
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)
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53 Weeks |
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Ending |
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52 Weeks |
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Three Months Ended |
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Six Months Ended |
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April 3, 2011 |
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Ended |
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September 26, 2010 |
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September 27, 2009 |
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September 26, 2010 |
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September 27, 2009 |
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(Forecasted) |
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March 28, 2010 |
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Net income |
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$ |
1,214 |
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$ |
803 |
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$ |
1,940 |
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$ |
1,341 |
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$ |
5,679 |
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$ |
4,780 |
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Interest expense |
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125 |
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204 |
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222 |
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400 |
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380 |
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692 |
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Interest income |
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(0 |
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(4 |
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(2 |
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(11 |
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(2 |
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(17 |
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Income tax expense on continuing operations |
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796 |
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471 |
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1,251 |
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811 |
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3,524 |
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3,103 |
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Income tax benefit on discontinued operations |
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(1 |
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4 |
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(4 |
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(7 |
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(15 |
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(69 |
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Depreciation |
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64 |
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75 |
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128 |
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|
148 |
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|
300 |
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286 |
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Amortization |
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309 |
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|
485 |
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598 |
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919 |
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1,200 |
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1,544 |
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Proxy contest costs |
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320 |
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— |
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401 |
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— |
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401 |
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— |
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Cost of non-vested stock awarded to certain employees in fiscal year 2011 |
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209 |
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— |
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209 |
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— |
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313 |
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Impairment charge — asset held for sale |
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— |
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— |
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— |
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— |
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— |
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154 |
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Adjusted EBITDA |
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3,036 |
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2,038 |
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4,743 |
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3,601 |
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$ |
11,780 |
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$ |
10,473 |
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Net Sales |
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23,711 |
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21,713 |
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40,878 |
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39,448 |
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$ |
95,000 |
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$ |
86,066 |
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Adjusted EBITDA as a percentage of net sales |
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12.8 |
% |
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9.4 |
% |
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11.6 |
% |
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9.1 |
% |
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12.4 |
% |
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12.2 |
% |
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In addition to the Company’s disclosure of its financial position and results of operations in
conformity with accounting principles generally accepted in the United States of America (“GAAP”),
the Company has also presented certain measures of its historical and expected 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, compensation costs related to non-vested stock awarded to certain
employees in fiscal year 2011 and impairment charges related to an asset held for sale. Adjusted
EBITDA is used by the Company internally to monitor the Company’s operating results and cash flow
and to evaluate the performance of its businesses. In addition, the Company has also presented its
anticipated diluted net income per share for its fiscal year ending April 3, 2011 on a basis which
excludes the effect, net of taxes, of the 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. The Company believes that its presentation of Adjusted
EBITDA and adjusted diluted earnings per share are useful in that they are important indicators of
the Company’s results of operations and 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 and diluted earnings per share are significant components that should be
considered in understanding and assessing the Company’s 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 Company’s GAAP financial measures, including its net income,
cash flow provided by or used in operating, investing or financing activities, and other measures
of the Company’s financial performance and liquidity. Because non-GAAP financial measures, by
definition, are not determined in accordance with GAAP, companies calculate them in varying ways.
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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