Crown Crafts Inc (CRWS) Q2 2025 Earnings Report

Revenue and profitability
- Revenue: $24.46 million in Q2 FY2025; YoY growth 1.37%; QoQ growth 50.88% (per reported metrics). The quarterly lift is primarily from Baby Boom, which contributed about $3.4 million in net sales in the quarter, partially offset by declines in legacy products and a previously discussed loss of a major retailer bid program.
- Gross profit and margin: Gross profit $6.957 million; gross margin 28.44% (vs 27.3% YoY). Margin expansion is driven by product mix changes; offset by higher lease costs for the California warehouse.
- EBITDA and operating performance: EBITDA $3.029 million; EBITDA margin 12.38%; operating income $1.509 million; operating margin 6.17%.
- Net income and earnings per share: Net income $0.86 million; net margin 3.52%; EPS $0.083 (diluted); weighted-average shares ~10.355 million.

Liquidity, cash flow, and balance sheet
- Cash and equivalents: $2.0 million at end of Q2 2025; revolver borrowings $20.8 million; total debt $35.44 million; net debt $33.46 million.
- Cash flow: Net cash provided by operating activities $(0.983) million; depreciation and amortization $1.52 million; change in working capital $(3.246) million; net cash used in investing activities $(16.546) million (includes acquisitions and other investing activities); net cash provided by financing activities $18.408 million (primarily financing activity related to debt and acquisition funding).
- Capital expenditure and free cash flow: Capex $0.191 million; free cash flow $(1.174) million; current ratio 3.32; quick ratio 1.51; cash ratio 0.11.

Balance sheet composition and leverage
- Total assets: $99.35 million; goodwill and intangible assets combined ~ $21.29 million (Goodwill $13.25m; Intangibles $8.05m).
- Total liabilities: $48.52 million; current liabilities $18.44 million; long-term debt $29.66 million; short-term debt $5.78 million.
- Equity: $50.84 million; debt-to-capitalization ≈ 0.41; debt-to-equity ≈ 0.70; dividend yield ~1.68%; payout ratio ~97.3% (indicative of the company’s reliance on earnings for dividend payments).

Operational and strategic indicators
- Acquisition impact: Baby Boom acquisition closed mid-FY2025 (approximately July 19, 2024) with total purchase price of $18 million, funded by an $8 million term loan and revolver capacity (originally $35m, now $40m). Baby Boom contributed ~$3.4 million of net sales in the quarter, supporting a positive top-line delta against legacy declines.
- Cost discipline and footprint optimization: Management notes plans to consolidate warehouse footprint in fiscal 2026 to reduce costs and improve operating leverage.
- Cross-brand and distribution initiatives: Ongoing cross-selling opportunities across Manhattan Toy, Baby Boom, and legacy brands; expansion of Manhattan Toy in Walmart stores and Europe via Sassy distributors; progress on product development integration across teams.
- Direct-to-consumer initiatives: NoJo direct-to-consumer site targeted for holiday launch; Sassy Babies site development underway.