Yahoo Finance Charles & Colvard Ltd (CTHR) Q3 2024 Earnings Call Transcript Highlights: Navigating ...
Revenue: $5.3 million in Q3 FY 2024, down 21% from $6.6 million in Q3 FY 2023.
Gross Margin: 23% in Q3 FY 2024, down from 32% in Q3 FY 2023.
Net Income: Net loss of $3.6 million in Q3 FY 2024, improved from a net loss of $8.4 million in Q3 FY 2023.
Earnings Per Share: Loss of $0.12 per diluted share in Q3 FY 2024, compared to a loss of $0.28 per diluted share in Q3 FY 2023.
Inventory: $25.3 million as of March 31, 2024, down from $33.3 million as of March 31, 2023.
Free Cash Flow: Used $2.1 million in operations during Q3 FY 2024, compared to $800,000 used in Q3 FY 2023.
Release Date: May 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Revenue declines are shrinking across sequential quarters, showing signs of stabilization.
Increased sales in key product lines, with Forever One and KDL lab-grown diamond sales up from the previous year.
Expansion into new markets and product categories, including the launch of the Everbright gem brand.
Strategic investments in marketing and digital platforms to enhance brand awareness and customer engagement.
Strong liquidity position with $9.2 million in cash and access to additional credit facilities.
Negative Points
Overall revenue for Q3 was down 21% compared to the same quarter last year.
Continued margin erosion due to rising gold prices and increased promotional activities.
Significant increase in operating expenses, particularly in sales and marketing.
Net loss reported for the quarter, although lower than the previous year's loss.
Challenges in the jewelry and gemstone market, including pricing pressures and weak consumer confidence.
Q & A Highlights
Q: Do you still have your stock buyback in place and are management buying stock back personally? A: Don O'Connell, President and CEO of Charles & Colvard, confirmed that directors, including himself, have bought a significant amount of shares recently. He mentioned that $4.5 million remains in the repurchase program for stock buybacks.
Q: Are you gentlemen going to buy back stock at a sort of book value here? A: Don O'Connell noted that the company is trading below book value and considers it a wise move to buy back stock, ensuring they maintain liquidity and complete ongoing initiatives.
Q: At what point do you think the company could at least turn cash flow positive? A: Don O'Connell explained that the company is focusing on completing goals and initiatives that include building out capabilities and marketing strategies. He emphasized the importance of getting a return on ad spend and mentioned the launch of a next-gen website expected to drive future growth and help achieve profitability.
Q: Have you discussed or tried to form any partnerships in terms of companies that you sell through invest in the company or to help you with any of this stuff in terms of finance? A: Don O'Connell acknowledged ongoing conversations with potential partners and alliances within the jewelry industry, though nothing specific could be disclosed at the moment.
Q: I just have one question. Why draw on the credit facility considering the high cash balance? A: Don O'Connell responded that the decision to draw $0.5 million from the credit facility was strategic, ensuring its availability and functionality, and described the action as a good move for the company at the time.
Q: Do you think you'll continue buying back stock? A: Don O'Connell expressed belief in the opportunity presented by the current stock prices and confirmed the continuation of stock buybacks as part of their strategy.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
