Okay, good morning. Our next presenting company is Crown Crafts, ticker symbol CRWS, trades on the Nasdaq. Company is involved in toddler bedding and some other infant goods. Just made an acquisition with some very attractive licensed brands that we'll get into in a minute. Starting off the presentation today is the CEO, Olivia Elliott, and with her today, here in a minute, will also be the CFO, Craig Demarest. So with that, Olivia?
Thank you. Good morning, everyone, and thank you for coming to our presentation. As John mentioned, we're Crown Crafts Incorporated. We're based in Gonzales, Louisiana, and we are in the infant, toddler, and juvenile consumer products industry. I'm not gonna go through the forward-looking statements. They're, you know, the same as everything. So as we mentioned, we're a leading producer of infant and juvenile consumer products. We sell our products under some of the most popular licensed brands in the world, Disney, and others, under private label brands for some of the largest retailers like Walmart and under our own company brands. We've been steadily profitable in what's traditionally been a stable niche of the retail industry, and most recently, we've done two acquisitions.
The first one was in March of 2023, of Manhattan Toy, and we'll talk about that a little, later on. The most recent one was just this past July, less than a month ago, we did an acquisition of some toddler bedding business and diaper bags that's gonna add to our growing product line and some of our licenses. The company was initially founded in 1957, but it had nothing to do with the infant consumer product business. It was more in what they have called the adult top-of-the-bed business. So it had the Royal Sateen and Calvin Klein licenses, sheets, duvets, that type of thing that they sold for the adult bedroom.
In 1995, our former CEO, who was the CEO from 2001 up until a couple of years ago, he was hired to do some diversification, and from 1995 to kind of 1999, they bought a series of companies that got us into the infant and toddler businesses. Later in kind of the late '90s and the early 2000s, the legacy part of the business started having some problems. They lost some product lines. They built a manufacturing facility in Roxboro, North Carolina, when everyone else was going to China, and a number of other missteps. And so the banks kind of stepped in at that point in time and said, "You know what?
You're gonna sell off everything that was legacy, and you're gonna come out of a reorganization as only in the infant consumer products industry." So we moved the corporate headquarters from Atlanta, Georgia, to Gonzales, Louisiana, which, if you don't know where that is, it's almost halfway in between Baton Rouge and New Orleans. And kind of started over with an entirely new product team. I mean, kind of management team. And so I joined the company in 2001 as the treasurer. Later on, I was promoted to the CFO, and just recently to President and CEO. And so I've been with the company for 24 years, and a lot of our management team has been there even longer than me.
We have people that have been there for 35 + years, and so we've got a great management team and a great workforce that all came from this reorganization. We spent a few years unable to really do anything but pay the banks back, and in 2006, 2007, we reorganized the financing arrangements. We came out of it able to start paying. Well, we got re-listed on Nasdaq, started paying dividends, and then we started doing more acquisitions that increased our market share in the infant and toddler arena. We have a number of offices, mostly in the U.S. . As I said, we're based in Gonzales. That's also the headquarters for our Sassy Baby division.
Sassy Baby has product development and sales teams in both Minneapolis, Minnesota, and Grand Rapids, Michigan, and a distribution facility in Eden Valley, Minnesota, which is right now only handling the Manhattan Toy part of the business. But we're in process with the new acquisition of moving some additional product lines to Eden Valley so that we can make room in the Compton warehouse for the new acquisition. Compton, California, is where NoJo Baby and Kids is headquartered, and that's currently the distribution facility for all of Sassy Baby and NoJo. The most recent acquisition came with an office in Newark, New Jersey, which is gonna be the product development team for the diaper bags.
We also had, we've had for a while, a foreign representative office in Shanghai, China, and with the diaper bags, we're gonna have a second foreign representative office in Shenzhen, China. Our fiscal year ends at the end of March, and so all of these numbers that we're talking about for the next few slides are all for the fiscal year that just ended and do not include the Baby Boom acquisition. Right now, toys are our largest category of business. That's the combination of an acquisition we did in 2017 of Sassy Baby Toys, and then the Manhattan Toy acquisition from last year. Following that is our bibs, which is 22% of the business, toddler bedding, which is 19%, infant bedding at 17%, and we have a small category of disposable products at 4%.
This is the category that was probably hit the most during COVID, because those products are for mom on the go. You put them in your diaper bag. It's a table topper that, you know, you use at restaurants to the baby puts their food on it instead of a plate. Disposable bibs, disposable diaper sacks, so when you change the baby's diaper in public or wherever, you can put the soiled diaper in the thing. And so mom wasn't on the go during that timeframe, so we lost a lot of the retail placement 'cause the consumer wasn't going out and buying that. So that's that product category is steadily being built back up.
Baby Boom, when you look at how that's gonna affect this chart, it's gonna increase the toddler bedding, and then it's gonna add a new category of business, which is diaper bags. From a distribution channel perspective, Walmart is our largest customer, 42%, followed by Amazon at 19%. Target is at 8%. All other national retailers combined is 10%. We do have 6% of our business that is international. That piece of the business, we're really focusing on and growing. With the Manhattan Toy acquisition, we got a completely new channel, which is LEGOLAND, and I'll show you some of those products when we get to the pictures in a minute. Manhattan Toy has its own direct-to-consumer website, which is 1%, and then all other retailers are about 5%.
Looking at what the product line is, the NoJo category of business, if you look at the picture on the left, that's your typical crib bedding, so that's for a baby up until maybe two years old. That is typically something that the mother picks out and the grandparents pay for. Most of the bigger priced items are something that grandparents buy. This is typically gonna be more whimsical. It's gonna be kind of an extension of the home in today's day and age, whereas maybe 20 years ago, 15 years ago, you bought pink and you bought blue, and you painted the nursery to be very, you know, gender specific. Now people are decorating the nursery...
You know, if your house is gray, they're gonna go in, into the nursery with grays, and it's gonna look more like a part of your home decorations. And so you're seeing a lot of whimsical. We still do see a lot of the licensed products here, more in the Walmart side of the business. But, you know, your typical higher-end spender mom is gonna look for something that matches her house. Then you go to the right, and so this is the toddler bedding category. This is something that is for children more two to four years old, and it's a transitional bed. You take the mattress out of the crib, and then you put it into this little mini bed. It's something that you don't have to have.
You can go straight to a twin, but it's a category of business that's fairly... I'm not gonna- I'm gonna say, use the word cheap, but it's a lower priced item. You're not gonna be able to sell it if it's more than a certain amount because you don't need it, and it's something that the child is picking out. So the child is watching, you know, Disney on TV or a new movie that's come out. A few years ago, it was Frozen. I mean, we couldn't keep Frozen on the shelf in this category, but the two-year-old is picking this out and telling their parents, "Hey, that's what I want to sleep on." NoJo also has other categories, and so kind of the idea of NoJo is to decorate the entire nursery.
So they've got, you know, the wall decorations, they've got plush that matches the bedding sets, receiving blankets, they've got, it's play mats, but it's not the developmental play mats, it's more the pretty that goes with the bedding set, and then a lot of blankets. So Sassy Baby Products is a combination of what used to be called Hamco, and that's the bib category, along with a lot of the disposables, and then it's also got the toy side of the business, and then most recently, beginning in April, we merged Manhattan Toy into Sassy Baby. So the first category of business is gonna be bibs. We're the leading supplier of bibs in the country. We have 100% of the planogram at Walmart.
We have business at a lot of other retailers, and we do bibs, both in the reusable bibs as well as the disposable bibs, which is the top right category, which is the Bibsters brand. That was an acquisition we did in 2010, and interestingly, probably the biggest buyer of that is Costco, Japan, and we never even touch the product. It's one SKU. They buy it in container loads and bring it straight from China to Japan. You know, they do a little ancillary business in the burp cloths and some soft bath. We do some robes and some hooded towels, et cetera. The acquisition we did in 2017, as I mentioned, that got us into the developmental toy category.
It's something we had never done before, but Sassy had been around for over 30 when we did the acquisition, and longer now, and the product development lead there, that's the senior vice president of product development, has been with Sassy Baby almost since the beginning. And so she came with a lot of experience in the toy category. And we really pride ourselves in this category 'cause it's all developmental, and so our product development team really understands what, how that baby grows.
You know, when a baby's first born, they can't see colors, so it's really important to have red and white and, you know, a baby that is just sitting up, you know, you have a stacker where you have to put the rings on it. Well, a baby doesn't know how to put those on in order, so they get very frustrated if you put the wrong one on first, that you can't get the rest of them on. You know, they work to match what the baby should be learning at that point in time. We're very good at that, and we're really seen as kind of a go-to when some of the major retailers, like Walmart, want to see something, they'll come to us and ask us to develop that product.
We're very proud of this acquisition and how well it's grown since we did it. And then, as I mentioned, we did our first recent acquisition in March of 2023. That was Manhattan Toy, which is, it's an extension of the toy category. It's kind of a higher end brand. So if you look at the brand strategy here, Sassy Baby is more a better brand, and Manhattan Toy is a best. They got us into... Well, I guess I'll mention, they're based in Minneapolis. We kept a team in Minneapolis, and we still have that office. And then it got us into dolls and into plush, and it got us into the LEGO license.
So looking at the pictures, what it got us into also is kind of this developmental toys that's more of the wooden toy, which kind of lends it to that higher-end brand, as opposed to the plastics, which is what Sassy Baby sell into Walmart and to Target. These products are sold into Target and then into the specialty stores, which was a new distribution channel for us. And it got us into, if you look kind of at the bottom left, that's a standalone toy, and it's a bigger item. It's a higher end, higher price item, so it got us, it allowed our price points to be a little bit higher. And then you'll see it got us into plush, and then it got us into dolls, which were categories we were not in when we did the Sassy acquisition.
An interesting license that came with this are, you can see the LEGO products, and those are sold primarily into LEGOLAND, and LEGOLAND is growing. They're building new theme parks, and they're actually adding two in China, one of which is going to be the largest in the world. So we see that as a good opportunity to grow. Most recent acquisition was the assets of Baby Boom, which was based in New Jersey, and this part of the business is gonna be folded into NoJo. So it'll be... We'll keep the brand, but it'll be under NoJo Baby and Kids. They've been around a long time. They were one of our major competitors in the toddler business.
But what we got here were a lot of licenses that we didn't already have, and a lot of them are very popular. I mean, Bluey, Cocomelon, Ms. Rachel, and then it also got us into a new product category, which is gonna be diaper bags, and that's a category that we think we have a huge opportunity to grow, especially in channels where they're not using. So they're not really doing all of the online, the dot-coms, like NoJo is doing, so we think we can get those products there. And then they're... We think we can take diaper bags, particularly international. Oh, and it's supposed to add about $20 million in sales annually. It won't be in this fiscal year because we won't have them for the full 12 months.
So these are some of their products. A lot of the same as what we looked at on the NoJo side and the toddler, the Nap Mats, and the toddler bedding and the blankets. And these are some of the diaper bags, which currently are primarily sold at Walmart and Target. And they have the Eddie Bauer license, which is primarily sold at Target, but it's one of the most popular brands in Target. This is our own brands, which you can see we added quite a few in the last few years. Sassy, Manhattan Toy, are very well known. They're kind of standalone on their own. When you get into the bedding side of the business, you know, that consumer's only around for a few months.
You know, mom starts looking to decorate her nursery at about three to four months, when she's pregnant three to four months, and then she wants it decorated by seven to eight months. That consumer's only out there for a period of time. So some of the infant bedding side of the business is not really brand driven, but most of it is sold under the NoJo brand, in addition to some of the licenses. And then we have Bibsters, which is the disposable side, and then Neat Solutions, which is also disposables and bibs. These are some of the licenses we have. Disney is by far the largest individual license. We have Paw Patrol, Marvel, we mentioned LEGO, Warner Brothers, Cocomelon, Bluey, Carter's.
So we feel like we have a very, very strong license portfolio. And so a couple of years ago, when we had the transition, when Randall decided to retire, and I stepped up as the CEO, we did a whole new strategic plan. It had been a while since we'd done one. And so we started out with growing the toy category, which we did both through an acquisition of Manhattan Toy, as well as organically, we've grown some of that business. Entering into new and adjacent product categories organically and through tuck-in acquisitions. We've kind of seen that happen in the last two years, not only with Manhattan Toy, but with Baby Boom now. I have to say that at this point in time, we've done two fairly sizable acquisitions for us.
We're gonna have to step back from the acquisition category and really absorb that. So I think you'll see our future growth and, other than those two acquisitions, is gonna be more organic into taking those two acquisitions and growing them. Selling direct to consumer took a little bit of a step back because we had to focus on the two acquisitions, so you'll see us in the next few months really step that up, and our goal is to have most of our product categories sold online through our own websites in the next, I'm going to say, anywhere from four to 12 months. And then we were constantly implementing operating cost efficiencies. Most recently, we closed the London office that came with the Manhattan Toy.
It had three people there, a whole office staffed, and so we merged that into another office and only hired two people in the U.S. And then we merged Manhattan Toy into Sassy Baby. We have fewer employees than we used to have because now we're able to better cross have employees do both sides. And then we're gonna continue to make further investments in technology and our organizational structure. And what you're gonna see there is, you know, we're looking primarily at trying to find a warehouse where we can put everything into one warehouse and, you know, probably make some improvements there in our efficiencies and in our technologies. And with that, I'm going to turn it over to Craig.
Good morning. It's still morning, right? We have just a few financial slides. First, we'll talk a little bit about each of the last three fiscal years.
... And we have a slide that talks about our most recently completed Q1 , and then we've got a slide that goes into our dividend history for the past 25 years. In this first slide, you've seen net sales. First off, I'll tell you that I think Olivia alluded to this, that our fiscal year is the Sunday that falls closest to 31 March . In this particular fiscal year, the most recent, it happened to be on Sunday, 31 March . But what that does is, it gives us a 52, 53-week year. Every so often, it'll be a 53-week year. And in this look-back period, 2022 is a 53-week period. You can see in fiscal 2022, we were still riding a bit of the COVID high.
The COVID pandemic started around the end of our fiscal 2020, so which was March-ish 2020. And we not only survived COVID, but we really thrived during COVID as the reductions in the brick-and-mortar sales were more than offset with our increased online presence. So that's the 2022 sales you see at $87.4 million. To 20—to fiscal 2023 , we definitely had a decline, that's caused, at least in part, by the 52-53-week year, coming off of 53, going to 52. But also in seeing a lot of the headwinds that a lot of our competitors and others in the industry saw.
A lot of the customers, our big box retailers, had gone through COVID and had the issues with getting product on the shelves, coming across the ocean and the backups at the ports, and they didn't want to be caught again in that sort of situation. So, coming through COVID, they were a good bit over-inventoried, as we said. And so, coming into 2023, they're still running through a lot of that inventory. We also had the impact of one of our customers, buybuy BABY, going through bankruptcy, and that also had an impact on our sales in fiscal 2023. Fiscal 2024, you see the impact of Manhattan Toy.
As Olivia said, we acquired Manhattan Toy in March 2023, so with that being our fiscal year-end, it only contributed two weeks worth of sales in fiscal 2023. But the full effect is in fiscal 2024, where they contributed almost $18 million to our sales, which was partially offset by declines in our legacy business. The bedding and blankets declined about $4.5 million, while the bibs and disposables were down about $0.5 million. And again, that's kind of the consumer pullback from inflation and the result of the retailers running through their inventory. The next slide or chart is the EPS.
Going back to 2022, the $0.98 per share is, I'm not gonna say misleading. It was what it was, but it does include almost a $2 million gain from the forgiveness of the PPP loan that we had taken out during COVID. So that's adjusted out of EPS from $0.98 to arrive at $0.79 per share, and we didn't make any similar adjustments in fiscal 2023 and fiscal 2024. Looking at the Adjusted EBITDA and the margin percentage, you know, margins have been on a bit of a decline. Again, reflecting from 2022, certain of the operating losses, we closed one of our subsidiaries, Carousel Designs.
There were some operating losses in 2022 that contributed to that operating margin or EBITDA margin percentage. In 2023, again, the loss of buybuy BABY, which was probably a higher margin than some of our other customers, along with write-offs of inventory and some accounts receivable that we were unable to collect, impacting 2023. Towards the end of 2023 was when we signed a new lease for our warehouse in Compton.
I think Olivia has alluded in previous presentations. You know, the warehouse in Compton, we had been in it for a number of years, and it came time to renew the lease, and it was a significant increase, almost doubled the cost of our rent in Compton. That started in 2023, and you see it coming through in 2024 for the full year, the full effect of it. Turning to the Q1 , sales declined slightly, as we reported in our Q1 Q and on the conference call. That was actually a reduction in the bibs and toys part of our business, as a major retailer was reducing their inventory levels. And in fact, not even reordering to the POS level that was-...
being sold through. And also the loss of a big bib program at Target, I believe. But those declines were offset by a slight increase, for the first time in a while, in our NoJo side, the bedding and blanket side of our business. The adjustments on the EPS, we adjusted in the Q1 of 2025. Again, Olivia mentioned the cost containment efforts that we're going through. And so we did close our office in the U.K., Manhattan Toy Europe, and there were severance costs, and there were lease termination costs, and that amounted to about $244,000 in the Q2 .
And then also we had a smaller amount of acquisition costs that were associated with the Baby Boom acquisition that didn't close until July, so we'll see more acquisition costs in the July, excuse me, Q3. Again, looking at the adjusted EBITDA, that's been adjusted for the items that we took out of EPS. The margins are lower, and I think we discussed this on our call. We do have, I guess, an unfavorable movement in the fixed cost being allocated between our purchases inventory on the balance sheet and the cost of sales. The purchases have been lower than we anticipated, and so those fixed costs have fewer places to go.
Hopefully, with the Baby Boom acquisition, you know, that can fluctuate wildly from quarter to quarter. And in fact, on a comparable Q1 of the prior year, we had a favorable impact. This time, we had an unfavorable impact. That's causing the big difference from quarter to quarter. Looking at dividends since 2011, 2010, we have returned over $59 million in dividends to stockholders. You can see that in the 2021, sorry, 2021, and 2022 years, we did have special dividends that we declared during those fiscal years of $0.25, $0.25, and $0.35. We had no special dividends in 2023, 2024. Obviously, we were using the cash for acquisition purposes, and then in 2024 to pay down debt.
These are all fiscal year numbers. Well, the 2025 includes the dividend that we declared in the Q1 . We have declared another dividend that would be payable in October, the same $0.08 regular dividend. A couple other items that I don't really have a slide for, and that's just to kind of talk about balance sheet information. As of the Q2 , we had borrowings on our line of credit of about $1.5 million, and cash of about $1.1 million, for a net debt balance of $400,000. This is down from a net debt position of almost $7.3 million to start the year.
Of course, since Q2 , we've borrowed more money for the Baby Boom acquisition, and we'll be reporting all of that in an 8-K/A that will be filed probably by the first week of October. That'll give effect to the acquisition. With that, any questions?
How much did you pay for Manhattan and Baby Boom, and what do you think your long-term returns will be on those investments?
So we paid, I guess, by the time we settled, working capital was about $17 million for Manhattan Toy. The initial purchase price for Baby Boom was $18 million, subject to working capital adjustments. We anticipate at this point in time, that's probably gonna come in closer to $17 million. And we really don't forecast, so we, you know, the second part of the question, probably we're not gonna be able to answer. We don't give all of that publicly.
Do you, what kind of margin improvement or other improvements might occur from the new time?
Once again, we really don't forecast, so we're not gonna give that. I think that, you know, the furthest we can probably go is that Baby Boom will be immediately accretive. You know, it, it came to us profitably, which is a little bit different from our, our past acquisitions, where we tend to buy something that is struggling, and we go through a period of time where, where we have to fix it. So I do think that Baby Boom will, will help, and, and particularly because we have a lot of synergies there. We hired five people with the Baby Boom acquisition in New Jersey and then maybe six or seven in China. And we're gonna move the goods to the, the California warehouse, shuffling a little bit, moving some others from Eden Valley.
So there will be some initial, you know, I guess, in the first four to six months, there'll be some initial cost of just moving things around, but ultimately, when you take that out, it's gonna help.
There are covenants under the credit line that limit your ability to do dividends if there are any covenants?
There are covenants that will limit our special dividends, but not the regular dividends, so we don't see anything that will prevent us from doing those regular dividends. Yes. Anybody else? Okay, oh.
The Baby Boom, you sort of doubling down with Bibsters and bibs, and in two senses, they're not as good as the last.
Mm-hmm.
Now we are not going to go back into any hour.
Yeah.
How do you think about this category? Is margin better for the bedding? It's seen as stable, and toy is more product innovation?
I don't think either one's really that risky per se. They're probably about the same. The Baby Boom, what really, really made me excited about the Baby Boom was more the diaper bag side of the business, 'cause it's a new category for us. It's seen, in recent years, it's kinda seen a decline. A little bit of that was because of COVID, 'cause once again, the mom's not going out, so she doesn't really need a diaper bag. So we think we have an opportunity to grow that side of the business. From the toddler bedding side, it is the category that has seen a backslide that's primarily due to the economy, 'cause it's not really a necessity per se.
We've seen units hold up, so unit sales are really staying about the same, but you're seeing the consumer trade down from, say, a $49 bedding set to a $12 blanket. And we think we have the opportunity from both the NoJo side and the Baby Boom side on that toddler to take that category back up once the economy improves, and then, that people are buying more.
Can you give more color on the LEGO acquisition?
So the Manhattan Toy acquisition came with a license with LEGO. It started out initially being just a few SKUs, so the Ninjago, there was a Star Wars and then some Harry Potter that were sold into the parks. They're sold other places, too, but they're a pretty pricey item because of the construction of them. You know, trying to match those little bitty Legos to scale, it takes a lot out of it, so it's not something that can go to a Walmart per se. Where that becomes really exciting, so the family that founded LEGO had initially sold off the parks to Merlin Entertainments.
And so Merlin stocked just these products from us, but they also had plush from other manufacturers for, you know, the puppy dogs or the pandas or the whatever else was in there that wasn't specific LEGO. So now that the family is starting to buy the parks back, they're actually replacing those other plush manufacturers with us, and so we're gonna have the opportunity to not only get more SKUs in the parks, but LEGOLAND is growing. They're building, I think, three new parks that should open anytime through 2025, 2026. Two of those are in China, and one of the China parks is gonna be the largest in the world. And so we're seeing a lot of opportunity to grow there, both in terms of them growing and in terms of us getting more space.
This is one more. What's the motivation to sell it?
So on the first one, Manhattan Toy, it was owned by a trust of a very wealthy family. They had really sold everything else off, and it was a little bit of a one-off. Most everything was in industrial space, and then they had this one consumer products company, and it was the last one standing, and the patriarch of the family had passed away, and the descendants just wanted to get rid of it. On the Baby Boom side, I mean, I can tell you what we were told, but, you know, they developed a new product category that has just grown really fast, that is still in the infant products, but it's, for lack of a better word, it's like baby appliances.
It's, you know, it's taken the world from you having to mix your bottle up and put it in the microwave to put in a pod just like a Keurig. It just grew so fast that they focused on that, and they just wanted to get rid of the other product category. With that, I think we've gone over time, so thank you very much for attending, and if you have any questions, we'll be around.