CROWN CRAFTS INC Q3 FY2025 earnings call

• Completed integration of Baby Boom, which added $3.8M in sales. - Focus on refreshing product lines, developing new products. - Monitoring tariffs on Chinese imports and considering price adjustments. - Evaluating warehouse locations, narrowed down to two with cost and lead time considerations. - Paid regular quarterly dividend and declared next dividend. - Balance sheet strong with ability to manage borrowings and pay dividend via operating cash flow.

Net sales for the third quarter of fiscal 2025 were $23.3 million compared to $23.8 million in the prior year quarter. The decrease was primarily due to lower online toy sales, partially offset by $3.8 million in net sales from the Baby Boom acquisition. Gross profit margin was 26.1% in Q3 2025 compared to 27% in Q3 2024, due to product mix changes and higher lease costs. Marketing and administrative expenses were $4.4 million in Q3 2025 vs $4.1 million prior year, driven by Baby Boom integration costs. Net income was $893,000 or $0.09 per diluted share vs $1.7 million or $0.17 per diluted share prior year. Cash and cash equivalents were $1.1 million, borrowings $20.9 million. Year-to-date cash flow from operations was $7 million.

• Focus on growing top line while maintaining COGS. - Product development teams working on new products to complement current categories. - Expect to make a decision on new warehouse location soon. - Continue to pay dividend through operating cash flow.

• Tariffs on Chinese imports could impact costs and potentially require price increases. - Warehouse lease expirations in the coming years (Eden Valley in 2026, Compton in 2028, Minneapolis in 2027) pose relocation challenges. - Need to increase advertising spend to drive online sales for Manhattan Toy.

Q: Could you give more color on how you got the warehouse possibilities down to two?

A: Consideration of cost, lead times; leaning towards West Coast but still gathering info.

Q: Update on diaper bag business?

A: Good meetings with licensors and retailers, new designs, expecting placement in 2026.

Q: Status of Manhattan Toy holiday sales and Walmart placement?

A: Walmart placement doing well, holiday sales disappointing for Manhattan Toy due to trading down.

Q: Real estate lease expirations?

A: Eden Valley expires 2026, Compton 2028, Minneapolis 2027; decision on new warehouse soon.

Q: New toys in development?

A: Excited about Dottal line, refreshed STELLA program for Manhattan Toy.

Q: Ad spend for online sales?

A: Need to increase advertising spend to drive online sales for Manhattan Toy.

Q: Tariffs on Chinese imports?

A: Working with suppliers to absorb increase, PO by PO basis to adjust prices