Good morning and welcome to the Crown Crafts Financial Results for the Fourth Quarter and Full-Year Fiscal 2023. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to John Beisler, Investor Relations. Please go ahead.

Thank you, operator and good morning everyone. We appreciate you joining us for the Crown Crafts’ fourth quarter and fiscal 2023 conference call. Joining me on the call today are Crown Crafts’ President and CEO, Olivia Elliott; and the company's CFO, Craig Demarest. Earlier this morning, Crown Crafts issued a press release regarding their fourth quarter and fiscal 2023 results. A copy of this release is available on the company's website, crowncrafts.com. The company's Form 10-K is expected to be filed within the next few days. During today's call, the company will make certain forward-looking statements and actual results may differ materially from those expressed or implied. These statements are subject to risks and uncertainties that may be beyond Crown Crafts control and the company is under no obligation to update these statements. For more information about the company's risk factors and other uncertainties, please refer to the company's filings with the Securities and Exchange Commission. Finally, I would like to remind you today's call is being recorded and a replay will be available through the company's investor relations page. Now, I would like to turn the call over to President and CEO, Olivia Elliott.

Thank you, John, and good morning, everyone. Fiscal 2023 presented a number of challenges across the business. The start of the year was impacted by the fallout of the port delays that occurred in the winter and spring of fiscal 2022, causing retailers to acquire excess inventories. Consumer spending slowed into the summer, thanks in part to the highest inflation the country has experienced in 40 years, which caused retailers to adjust their inventory positions, subsequently reducing their reorder levels in the second half of the fiscal year. We experienced this particularly within our toddler bedding category, which historically has represented almost half of NoJo’s business. Although recent headlines indicate inflation may have peaked in the near term, consumers are still experiencing higher prices for core needs such as food and housing, which limit their discretionary income. Despite these multiple challenges, we focused on strengthening our relationships with our customers and maintained our overall shelf space for the year. The obvious exception being BuyBuyBaby as its parent company's financial problems impacted sales throughout the year before they filed for bankruptcy in April. We also implemented cost savings across the business. On a full-year basis, our marketing and administrative expenses decreased, compared to fiscal 2022, even when including certain one-time items that Craig will speak to shortly. In March 2023, we purchased Manhattan Group, including Manhattan Toy and Manhattan Toy Europe. We believe this acquisition provides many opportunities in fiscal 2024 and beyond, which I'll detail later in the call. Most importantly, we remained profitable and maintained our quarterly dividend payment in a time when many companies within the consumer and retail sector were forced to either reduce or completely suspend their dividend. Overall, we weathered the multiple headwinds throughout fiscal 2023 and remain well-positioned entering fiscal 2024. With that, I would like to turn the call over to Craig to cover the financials in more detail.

Thank you, Olivia, and good morning everyone. Before I begin the discussion of our results, please note that the fourth quarter of fiscal 2022 was a 14-week period versus 13 weeks this year. And fiscal year 2022 was a 53-week year versus 52 weeks this year. Net sales for the fourth quarter of 2023 were 21.6 million, compared to 25.7 million in the prior year quarter. The decline was primarily driven by reduced orders from our customers as a result of consumers' response to the current macroeconomic conditions and adjusted inventory levels, as well as the reduction in sales to BuyBuyBaby and the impact of the extra week in the fourth quarter of the prior fiscal year. The prior year fourth quarter also included unusually high sales as a result of retailers' overstocking inventory following supply chain delays in late calendar 2021. Gross margin for the quarter was 21.9%, compared to 25% in the fourth quarter of fiscal 2022. The margin decrease reflected higher inventory reserves in the current year quarter, related to BuyBuyBaby private label inventory and the impact of a rent increase at our warehouse in California. Marketing and administrative expenses were 3.8 million versus 3.4 million in the prior year quarter. The increase here is primarily driven by expenses related to the Manhattan Group acquisition. Net income for the quarter was 828,000 or $0.08 per diluted share, compared to net income of 2.4 million or $0.24 per diluted share in the prior year quarter. Net sales for fiscal 2023 were 75 million, compared to 87.4 million in the prior year. The decline was primarily driven by the factors mentioned earlier. Gross margin for the year was 26.4%, compared to 26.7% in fiscal 2022. We've seen a benefit in the current year from some stabilization in many of our input costs and increases in the selling price of certain products. Gross margin in fiscal 2023 was negatively impacted by the February rent increase at our warehouse in California. Marketing and administrative expenses were 12.7 million versus 13 million in the prior year. The decrease was primarily driven by the closure of our Carousel Designs subsidiary in the first quarter of fiscal 2022 and lower compensation costs in the current year, which were partially offset by expenses related to BuyBuyBaby's bad debt reserve and the Manhattan Group acquisition expenses. Other income in fiscal 2023 was 258,000, compared to 2 million in the prior year, the primary driver being last year's gain on the extinguishment of debt. Net income for the year was 5.6 million or $0.56 per diluted share, compared to net income of 9.9 million or $0.98 per diluted share in the prior year. Turning now to the balance sheet. As Olivia mentioned earlier, we acquired Manhattan Group on March 17. The purchase price was $17 million and was funded through our revolver and cash on hand. Our year-end financials reflect the acquisition of Manhattan Group. Cash and cash equivalents at the end of fiscal 2023 totaled 1.7 million, compared to 1.6 million at the end of the prior year. Inventories at the end of fiscal 2023 were 34.2 million, compared to 25.8 million at the end of the third quarter and 20.7 million at the end of fiscal 2022. The increase in inventories is primarily related to the acquisition of Manhattan Group as Sassy and NoJo inventories were in line with historical fiscal year-end levels. In conjunction with the Manhattan Group purchase, we increased our line of credit from 26 million to 35 million and extended the agreement by three years through July 2028. Our long-term debt at the end of fiscal 2023 was 12.7 million with an interest rate of 6.4%. Finally, we paid $0.32 per share in cash dividends to shareholders in fiscal 2023. We believe the dividend, which currently provides a 6.1% yield based on yesterday's closing price, is a key component to offering long-term returns to our shareholders. Now, I will turn the call back over to Olivia for additional comments.

Thank you, Craig. This is the first opportunity we've had to discuss our acquisition of Manhattan Group. So let me take a few minutes to discuss how they fit into our company and the opportunities they provide. Manhattan Toy's product offerings of plush, dolls, and wooden toys are highly complementary to Crown Crafts' existing line of Sassy toys. The product range targets a higher income consumer. There's currently very little overlap in distribution channels. Manhattan Toy is sold into Amazon, Target, and Specialty Stores, as well as Legoland, and they have no penetration in Walmart. So, there are opportunities to expand our sales channels on both sides. We also have an opportunity on the international front through Manhattan in Europe. Roughly 14% of Manhattan sales are international. We also believe there are meaningful cost savings opportunities available from sourcing and importation. As we mentioned in the March release, we expect this acquisition will add approximately $24 million to the company's net sales in fiscal 2024 and be accretive to earnings by the end of the fiscal year. It should be noted that approximately 35% to 40% of Manhattan sales are in our third fiscal quarter, which is from October through December. The toy category will become our largest product category across the business, representing approximately 40% of consolidated net sales. Overall, we believe we are well-positioned entering fiscal 2024, which would be further helped by an improvement in the macroeconomic picture. We are excited about the opportunities that the addition of Manhattan Toy brings to us and look forward to reporting on our progress in the coming quarters. With that, I’d like to open up the line for questions. Drew?

The first question comes from John Deysher with Pinnacle. Please go ahead.

Hi, good morning. Just a couple of quick questions. Regarding the reserve for the BuyBuyBaby bankruptcy, how much was that exactly?

What is the amount related to the receivables?

I think 263.

Yes. 263. That sounds right. Yes.

263,000?

Right.

Okay, okay. There is no additional exposure going forward with that client?

No. We've got some private label inventory that we also took reserves on in the quarter for about $300,000. And from a go-forward standpoint, no, we don't believe we've got any exposure out there.

Okay. So, 300,000 for the private label and 263,000 for BuyBuyBaby?

For the receivables, yes.

For the receivables, right. Okay. Good. And regarding the acquisition, what were the non-recurring acquisition-related costs in the fourth quarter?

So that was primarily just the due diligence costs, a little bit of travel to do the due diligence and make the announcement, some accounting fees and that type of thing. So, it's just – it's truly acquisition due diligence type costs.

Okay. And what would those be in total?

They were …

370,000, roughly.

370,000. Okay. So, it looks like you had about 900,000 of non-recurring costs in the fourth quarter. Is that right? Total?

That's fair, yes.

That’s fair enough. Yes.

And going forward, what kind of – when you get to Manhattan Toy to where you want it to be, can you give us a feel for, kind of what the cost savings might be on a go-forward basis?

That's not something we've really given publicly. I don't think we're really ready yet to discuss that.

Okay. When do you think you'll have a better handle on that?

I think probably maybe mid-year, maybe six months into this year. We'd like to get at least through a few months of sales and we're already realizing some cost savings. I mean, it's easy to realize the cost savings and freight when their last calendar year included the highest of all time, but we're also getting a lot of help, just in negotiating better prices with the suppliers, etcetera. So, it would be nice to have a few months behind our belt before we really put that out in the world.

Okay. So, another six months or so?

Yes, that would be good.

All right. Good. Thanks very much and good luck.

Thank you.

Thanks.

This concludes our question-and-answer session. At this time, I would like to turn the conference back over to Olivia Elliott for any closing remarks.

Thank you, Drew. Thank you for your continued interest in the company. We look forward to speaking with you again when we report our first quarter results in August.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.