Crown Crafts (CRWS) investor relations material

Executive summary

• Q3 net sales were $20.7 million, down 11.3% year-over-year, while net income rose to $1.5 million from $900,000, reflecting resilience amid a challenging demand environment and higher tariffs.

• Gross profit margin declined to 23.5% from 26.1% year-over-year, mainly due to increased tariffs on imports from China.

• Profitability improved due to insurance proceeds, pricing, and cost actions, despite ongoing macroeconomic headwinds and consumer price sensitivity.

• Positive performance was noted in bibs, toys, and disposable categories during the holiday season, but bedding and diaper bag sales declined as consumers traded down to lower-priced items.

• Announced relaunch of Groovy Girls doll line, targeting specialty and direct-to-consumer channels, with international distribution planned.

Financial highlights

• Gross profit was $4.9 million for the quarter, down from $6.1 million year-over-year; gross margin was 23.5%.

• Marketing and administrative expenses increased by $600,000 to $5 million, mainly from severance and advertising costs.

• Other income included $2.5 million in insurance proceeds related to a recent acquisition, with a net $2.1 million impact to pre-tax income.

• Income before tax was $2.1 million, up from $1.3 million; net income was $1.5 million, up 69.1% year-over-year; EPS rose to $0.14 from $0.09.

• Net cash from operating activities for the nine-month period was $7.1 million, slightly up from $7 million.

Outlook and guidance

• Management remains focused on cost control, cash flow generation, disciplined capital allocation, and regular dividends.

• No further price increases are planned unless market conditions change, as recent increases have already impacted sales.

• Full realization of cost savings from consolidation and contract renegotiations is expected in the next fiscal year.

• Management expects cash flow from operations and available credit to be adequate for liquidity needs.

• No material change to the effective tax rate is anticipated for the remainder of fiscal 2026.