Crown Crafts, Inc.

Hello and good day. Welcome to the Crowncraft, Inc., first quarter fiscal year 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Craig Demarest, Chief Financial Officer of Crown. Please go ahead.

Thank you, MJ. Welcome to the Crown Crafts Investor Conference call for the first quarter of fiscal year 2023. With me today is Olivia Elliott, the company's President and Chief Executive Officer. A telephone replay of this call will be available One hour after the end of the call through 4 p.m. Central Time on November 17th. Also, a web replay of this call will be available for 90 days and can be accessed by visiting our website at www.crowncrafts.com. Before we begin, I would like to remind listeners of the cautionary language regarding forward-looking statements contained in the press release. That same language applies to comments made in today's conference call. I will now turn the call over to Olivia.

Good afternoon, and thank you for joining us for our first quarter fiscal year 2023 conference call. I'll start out with some general comments about our ongoing strategy, our quarterly results, and our current market trends. Then I'll turn it over to Craig, who will discuss our financial results in more detail. After that, I'll have a few more comments, and then we'll take any questions you may have. As I mentioned during last quarter's conference call, we're excited about our long-term opportunities and we're moving forward with our strategic plan, which includes expanding in the toy category, growing our product offerings both organically and through acquisition, increasing our direct sales to consumers, reducing operating costs and making further investments to enhance our technology and improve our organizational structure. At the same time, we're managing our business to maximize profitability in the face of current market challenges. were able to address these challenges from a position of strength due to our solid partnerships with retailers, our position in the marketplace, and the efforts of our exceptional team. Taking a look now at our first quarter results. First quarter net sales were 15.7 million, down from 18.7 million last year. A portion of the decrease in sales can be attributed to the prior year's inclusion of 631,000 in sales Associated with Carousel Designs, which ceased operations in May 2021. Multiple forces in the marketplace have contributed to the remainder of the sales decline. However, it's important to note that we have maintained shelf space at our retailers, our partnerships with them remain strong, and we're working closely together with them to navigate the current market challenges. After spending several quarters working to build up their inventories due to supply chain constraints and high consumer demand, We're not surprised that many retailers are now in an over inventory situation and have begun to reduce their purchases. At the same time, consumers have changed their buying behaviors due to inflation concerns. As a result, many consumers are now trading down to lower priced items, buying fewer items, or foregoing some items altogether. Nevertheless, we're working with retailers to ensure that consumer demand will be satisfied at these levels. First quarter net income was $1.4 million, or $0.14 per diluted share, compared with $2.7 million, or $0.27 per diluted share last year. Prior year included an almost $2 million gain of forgiveness of our Paycheck Protection Program loan. It also included an $802,000 net loss related to carousel designs. Excluding the impact of the loan forgiveness and carousel designs, Net income would have been $1.5 million or $0.15 for diluted share for the first quarter of last year. For the current year, we continue to see increased costs throughout the supply chain. However, we are beginning to see those costs somewhat stabilize. We pass along these increased costs to our customers whenever we can. We finished the quarter with $4.1 million in cash and no borrowings on our revolving line of credit. Our inventory was $26.4 million at the end of the quarter, which is higher than usual for this time of the year due primarily to the market trends mentioned earlier. The majority of our inventory is current in-line product. We continue to be diligent in managing inventory and we expect normal levels by the end of the third quarter, keeping in mind that this is when we will be going into Chinese New Year, a time when we typically have higher levels of inventory compared with the rest of the year. We also announced that our Board of Directors declared an $0.08 per share cash dividend on the company's common stock that will be paid on October 7, 2022 to shareholders of record at the close of business on September 16, 2022. This represents an annualized yield of 4.8% based on yesterday's closing price. We're very pleased that our balance sheet remains strong and we can continue to reward our stockholders with an attractive dividend. Now I'm going to turn the call over to Craig.