Crown Crafts (CRWS) investor relations material

Executive summary

• Net sales increased 8.3% year-over-year to $16.8 million, driven by improved inventory, strong execution, and higher sales of bibs, toys, and disposables, despite softness in bedding and diaper bags.

• Gross profit surged to $8.0 million, with gross margin rising to 47.9% (25.6% adjusted), primarily due to a $3.7 million tariff refund.

• Net income reached $2.1 million ($0.19 per share), reversing a net loss of $1.1 million ($0.10 per share) in the prior year quarter.

• Operating cash flow remained strong at $5.5 million, supporting significant debt reduction and balance sheet strength.

Financial highlights

• Tariff refunds reduced cost of goods sold by $3.7 million, contributing to gross profit of $8.0 million, up from $3.5 million last year.

• Marketing and administrative expenses were $5.2 million, including $500,000 in incentive compensation tied to tariff refunds.

• Net interest expense dropped to $190,000 from $283,000 year-over-year due to lower debt.

• Total liquidity at quarter-end was $12.1 million, with debt reduced from over $14 million to $7.6 million.

• Operating cash flow: $5.5 million, up from $5.2 million year-over-year.

Outlook and guidance

• Strategic focus on internal product development, margin expansion, and operational efficiency to drive future growth.

• Warehouse consolidation project to begin late fall or early winter, with completion targeted for May 2028.

• Dividend right-sized to $0.03 per share (approx. 4% yield) to balance growth investment, debt reduction, and shareholder returns.

• Management does not anticipate a material change to the effective tax rate for the remainder of fiscal 2027.

• Cash flow from operations and available credit expected to meet liquidity needs.