Exhibit 99.1
|
|
|
For Immediate Release
|
|
November 15, 2006 |
Crown Crafts, Inc. Reports Results for Second Quarter of Fiscal Year 2007
Gonzales, Louisiana – Crown Crafts, Inc. (the “Company”) (OTCBB: CRWS) today reported net
sales for the second quarter of fiscal year 2007, which ended October 1, 2006, of $21.6 million as
compared to net sales for the second quarter of fiscal year 2006 of $21.3 million. For the first
six months of fiscal year 2007, the Company had net sales of $37.7 million, up from $34.9 million
in the first six months of fiscal year 2006.
The increase in sales for the second quarter of fiscal year 2007 as compared to the second quarter
of fiscal year 2006 is primarily due to a $364,000 increase in sales of bedding, blankets and
accessories resulting from sales of new private label designs of $3.6 million and a net increase in
replenishment shipments of $600,000, offset by decreases of $2.8 million related to programs
dropped in the latter part of fiscal year 2006 and $1.0 million related to shipments that occurred
in the first quarter of the current year but in the second quarter of the prior year.
For the first six months of fiscal year 2007, sales of bedding, blankets and accessories increased
$2.3 million primarily due to sales of new private label designs which began shipping subsequent to
the second quarter of fiscal year 2006 of $6.0 million and a net increase in replenishment
shipments of $400,000, offset by a decrease of $4.1 million related to dropped programs. Sales of
bibs and bath products increased $688,000 in the first six months of the current year due to sales
of new designs amounting to $1.3 million, offset by a net decrease in replenishment orders of
$600,000.
On July 11, 2006 the Company refinanced its credit facilities. In connection with the refinancing,
non-interest bearing subordinated indebtedness was reduced from a net book value of $7 million to a
net book value of $2.9 million. The Company recorded a pre-tax gain of $4.1 million on the
subordinated debt reduction. Only a portion of the gain was subject
to federal income taxes and,
consequently, the after-tax effect of the gain on net income was $3.7 million ($0.38 per share).
A summary of the Company’s earnings is as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Six Months Ended |
| |
|
October 1, |
|
October 2, |
|
|
|
|
|
|
|
|
|
October 1, |
|
October 2, |
|
|
|
|
| |
|
2006 |
|
2005 |
|
$ Change |
|
% Change |
|
2006 |
|
2005 |
|
$ Change |
|
% Change |
Income before income taxes |
|
|
6,828 |
|
|
|
1,248 |
|
|
|
5,580 |
|
|
|
447.1 |
% |
|
|
8,353 |
|
|
|
988 |
|
|
|
7,365 |
|
|
|
745.4 |
% |
Income before income
taxes excluding gain on
refinancing |
|
|
2,759 |
|
|
|
1,248 |
|
|
|
1,511 |
|
|
|
121.1 |
% |
|
|
4,284 |
|
|
|
988 |
|
|
|
3,296 |
|
|
|
333.6 |
% |
Net income |
|
|
5,353 |
|
|
|
1,151 |
|
|
|
4,202 |
|
|
|
365.1 |
% |
|
|
6,264 |
|
|
|
883 |
|
|
|
5,381 |
|
|
|
609.4 |
% |
Net income before gain on
refinancing (net of
income taxes) |
|
|
1,657 |
|
|
|
1,151 |
|
|
|
506 |
|
|
|
44.0 |
% |
|
|
2,568 |
|
|
|
883 |
|
|
|
1,685 |
|
|
|
190.8 |
% |
Excluding the gain associated with the refinancing on July 11, 2006 of $4.1 million, pretax
income for the quarter was $2.8 million compared to pretax income of $1.2 million for the second
quarter of fiscal year 2006. Pretax income for the first six months of the current year excluding
the gain on refinancing was $4.3 million compared to pretax income in the prior year of $1 million.
Tax expense for the second quarter and first six months of fiscal year 2007 was $1.5 million and
$2.1 million, respectively, compared to $97,000 and $105,000 for the second quarter and first six
months of fiscal year 2006, respectively. As a result of the removal of a $4.2 million deferred
tax valuation allowance during the fourth quarter of fiscal year 2006, the Company’s income tax
expense for the second quarter and first six months of fiscal year 2007
included federal as well as state and local income taxes. Income tax expense for the first quarter
of fiscal year 2006 included only state and local income taxes.
Exclusive of the gain on debt refinancing, the effective tax rate for the three and six-month
periods ended October 1, 2006 was approximately 40.0%. Approximately $3.1 million of the gain on
debt refinancing related to the reversal of previously recognized debt-related expenses that were
not deductible for federal tax purposes and, consequently, the gain from the reversal of such
expenses was not taxable. The debt-related expenses pertained to the amortization of the original
issue discount on the previously issued non-interest bearing subordinated debt. Total tax expense
related to the gain on debt refinancing was $373,000, representing an effective tax rate of 9.2%.
Net income for the second quarter of fiscal year 2007 was $5.3 million, or $0.54 per diluted share,
compared to net income of $1.2 million, or $0.05 per diluted share, for the second quarter of
fiscal year 2006. Net income for the first six months of fiscal year 2007 was $6.3 million, or
$0.64 per diluted share, compared to net income of $0.9 million, or $0.04 per diluted share, for
the first six months of fiscal year 2006. Net income for both the quarter and six months of the
current year quarter includes the $4.1 million gain on refinancing ($3.7 million net of tax; $0.38
per diluted share).
“We are very pleased to report another successful quarter. Our pre-tax income excluding our gain
on our debt refinancing increased $1.5 million, or 121%, from the prior year quarter and our gross
margin improved from 21.7% to 26.7%. The gross margin improvement reflects our continued efforts
to control costs and improve our sourcing efforts,” commented E. Randall Chestnut, Chairman,
President and Chief Executive Officer of the Company. “In addition, we continue to be very pleased
with the market’s reaction to our refinancing and warrant extinguishment that was announced early
in the quarter. The stock price benefited favorably from the announcement, increasing from $0.65
immediately prior to the refinancing, reaching a high of $3.54 and closing the quarter at $3.08,”
Mr. Chestnut continued.
The Company will host a teleconference today at 1:00 p.m. Central Standard Time to discuss the
Company’s results and answer appropriate questions from stockholders. Interested investors may
join the teleconference by dialing (877) 209-9922. Please refer to confirmation number 844947. 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
found prior to the call on the investor relations portion of the Company’s website.
A telephone replay of the teleconference will be available from 2:45 p.m. Central Standard Time on
November 15, 2006 through 11:59 p.m. Central Standard Time on November 22, 2006. To access the
replay, dial (800) 475-6701 in the United States or (320) 365-3844 from international locations.
The access code for the replay is 844947.
Crown Crafts, Inc. designs, markets and distributes infant and juvenile consumer products,
including bedding, blankets, bibs, bath items and accessories, and luxury hand-woven home décor.
Its subsidiaries include Hamco, Inc. in Louisiana, Crown Crafts Infant Products, Inc. in California
and Churchill Weavers, Inc. in Kentucky. Crown Crafts is America’s largest distributor 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.
This release 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 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.
