|
Fact Sheet
Client Base
Crown Crafts’ customers are
mass merchants, chain stores,
department stores, specialty
home furnishing stores,
wholesale clubs, gift stores
and catalogue and direct-mail
houses. The company’s
largest customers are:
• Babies ‘R Us / Toys ‘R Us
• Wal-Mart Stores, Inc.
• Target Corp.
Market Overview
The entire infant products market has faced unprecedented challenges over the last five years. Early in 2005, the elimination of quotas on products imported from China, where most of the industry’s products are manufactured, had a negative impact on the company’s revenues. Additionally, certain customers implemented new marketing strategies by reducing their reliance on licensed products, such as the Disney and Classic Pooh product lines, and shifted to direct sourcing of private label merchandise. Despite these obstacles, Crown Crafts posted a 57 percent increase in pre-tax profits for its 2006 fiscal year.
Operations Overview
In response to changing business conditions in the consumer products industry, Crown Crafts significantly transitioned its business operations in 2006 to improve profitability and generate long-term growth opportunities. The company implemented an aggressive program of cost reductions and rationalization, and also outsourced virtually all of its manufacturing to foreign suppliers.
In addition, the company closed its distribution center in Gonzales, Louisiana and combined all distribution functions into its warehouse located in Compton, California. This move reduced the company’s distribution square footage by 28.5 percent. The company also combined duplicate financial functions for two of its major subsidiaries, which added to the savings.
Shareholder equity further benefited from the removal of a $4.2 million deferred tax valuation allowance.
The company restructured its debt in July 2006. The new financing package, secured through CITGroup / Commercial Services, Inc., substantially reduced the company’s total debt and its cost of funds and, importantly, extinguished all of the warrants that were exercisable by its lenders and certain shares that were issuable to management upon the exercise of such warrants, which together represented more than 70 percent of the company’s equity. The company recorded an approximate $4 million pre-tax gain on the debt restructuring.
Financial Highlights 2006 2005 2004
$ in millions except per share data
Net Sales $ 72.6 $ 83.9 $ 86.2
Gross Profit 17.1 17.0 19.6
Net Income Before Taxes 4.0 2.5 3.3
Net Income 8.0 2.4 3.1
Basic Net Income Per Share 0.84 0.26 0.33
Diluted Net Income Per Share 0.37 0.11 0.14
Total Assets 58.2 54.1 58.4
Total Debt 24.0 27.4 31.5
Shareholders’Equity 28.8 20.9 18.4
EBITDA 2006 2005 2004
$ in thousands
Net Income $ 7,967 $ 2,438 $ 3,103
Interest Expense 3,046 3,793 4,055
Interest Income (71) (9) (20)
Taxes (3,968) 105 222
Depreciation 479 457 532
EBITDA1 7,453 6,784 7,892
1 Earnings before interest, taxes, depreciation and amortization
|
