Good day, everyone, and welcome to the Crown Crafts Third Quarter Fiscal 2025 Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a telephone keypad. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to John Beisler with Three Part Advisors, the company's investor relations firm. Please go ahead. Thank you, Jamie, and good morning, everyone. We appreciate you joining us for the Crown Crafts Third Quarter Fiscal 2025 Conference Call. Joining me on the call this morning are Crown Crafts President and CEO Olivia Elliott and the company's CFO Craig Demarest. Earlier today, Crown Crafts filed its Form 10-Q and issued a press release regarding their third quarter fiscal 2025 financial results. A copy of this release is available on the company's website, crowncrafts.com. 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 the President and CEO, Olivia Elliott. Thank you, John. Good morning, everyone, and thank you for joining today's call. Our third quarter results reflect our ability to generate cash flow and profitability during this challenging period of economic uncertainty. In spite of the headwinds we have continued to face this fiscal year, our team has remained focused on delivering strong operating cash flow and proactively managing our controllable expenses. We also continue to refresh some of our categories and develop new products so that we are well positioned to capitalize on future growth when consumers are ready to spend more on discretionary items. During the quarter, we completed the integration of our most recent acquisition, Baby Boom, which we are excited to report added $3.8 million in sales this quarter. We remain optimistic about the future of these product categories, including diaper bags, which are a new category for us. With that, I'd like to turn it over to Craig to cover the financials in more detail, then I will follow up with additional comments before taking questions. Thank you, Olivia. Good morning, everyone. Net sales for the third quarter of fiscal 2025 were $23.3 million compared to $23.8 million in the prior year quarter. The decrease is primarily attributable to lower online toy sales and the loss in November of 2023 of a bib program at a major retailer. This was partially offset by the addition of the $3.8 million in net sales related to Baby Boom, which we acquired in the second quarter of this fiscal year. Gross profit for the quarter was 26.1% compared to 27% in the third quarter of fiscal 2024. The margin decrease can be attributed to slight changes in product mix together with higher lease costs for our warehouse in California. We continue to evaluate our footprint and look to reduce our warehousing costs through strategic consolidation in fiscal 2026. Our third quarter marketing and administrative expenses were $4.4 million compared to $4.1 million in the prior year quarter. The increase is primarily related to expenses associated with the purchase of Baby Boom, including $186,000 in acquisition-related costs. Interest expense for the quarter increased to $183,000 from the prior year quarter due to the higher borrowings related to the Baby Boom acquisition. Net income for the quarter was $893,000 or $0.09 per diluted share compared to net income of $1.7 million or $0.17 per diluted share in the prior year quarter. Turning now to our balance sheet, we remain in a strong financial position as cash and cash equivalents at the end of the third quarter were $1.1 million compared to $829,000 at the end of fiscal 2024. Borrowings under our credit facility at the end of the quarter were $20.9 million compared to $8.1 million at the end of fiscal 2024, reflecting amounts borrowed in the second quarter to fund the Baby Boom acquisition. Year-to-date through the end of the third quarter, cash flow from operations was $7 million compared to $4.1 million in the same period last year. We expect to use our cash flow to repay our borrowings. However, as always, our debt balance may fluctuate from quarter to quarter due to the timing of inventory purchases and other working capital needs. Our inventory balance has declined from $34.9 million in December of 2023 to $32.4 million in December of 2024, even with the inventory added in the Baby Boom acquisition. Finally, we paid our regular quarterly dividend of $0.08 per share and declared our next dividend, which will be paid in April. Now, I'll turn the call back over to Olivia for additional comments. Thank you, Craig. Looking ahead, our focus is on growing the top line while maintaining our cost discipline. In addition to refreshing our high-end toy and diaper bag lines acquired over the past couple of years, our product development teams are also focused on new products to complement our current categories. We're monitoring the ongoing updates out of Washington regarding tariffs, particularly as it pertains to announced 10% on Chinese imports, where virtually all of our products are made. As China remains our best sourcing option, we will need to work with our suppliers to absorb the increase and consider price increases. We continue to review potential locations to relocate our warehouse. After visiting three locations, we've narrowed that down to two and continue to evaluate the financial profiles of each. Overall, we remain well positioned to navigate the current economy while preparing our brands to perform as conditions improve. Our balance sheet is strong, and we're able to effectively manage our borrowings and continue to pay our dividends through operating cash flow, which stands as a key component in our strategy to deliver long-term value to our shareholders. With that, I'd like to open up the line for questions. Jamie. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Doug Ruth from Lenox Financial Services. Please go ahead with your question. Good morning, Olivia and Craig. Thank you for hosting the conference call today. Good morning. Could you give us a little more color and tell us how, now that you've got the warehouse possibilities down to two, could you tell us some of the things that you're seeing or some of the things that you're thinking about how you'll ultimately make the decision and what town to locate the warehouse? A big part of the consideration is going to obviously be cost. That being said, we need to look at lead times. One of our final options is closer to the West Coast, and one is closer to the East Coast. While you may save a little bit more in the lease cost going to the East Coast, the cost to get the goods all the way across the country is going to be higher. It is going to take longer. There is also a bigger impact should freight rates go up on the downside. We are looking at the whole big picture. For the most part, all the warehouses look exactly the same. We are mainly focused on the location, and any type of technology that we may want to put into the warehouses can be done at either location. Are you leaning towards one location over another, or you're totally undecided at this point? Probably leaning a little bit towards the West Coast location just from the overall package. We are still trying to get all of the information together and get the actual quotes for the locations that we were specifically looking at. Okay. Now, changing, could you give us an update on the diaper bag business and some of the initiatives that you're focused on? Sure. We've had some really good meetings with both some potential new licensors for diaper bags. It seems to be a category that a lot of people are interested in. We've also had some good meetings with the retailers. We've done some what I think are very good designs, some refreshed silhouettes, some refreshed looks. I think we've got a great deck that we've been showing, and we're hoping to get some new placement in that, though it won't be until 2026 because most of the lines for 2025 had already been placed by the time we did the acquisition in July. I think we've got a good opportunity coming in the next year or so to pick up some placement. Now, you had talked about potentially both domestic and international. Is that still what you're thinking, that there's opportunities in both places? Yeah, I think there's opportunities in both places. We're focusing on domestic first because we think that's a bigger opportunity. Yeah, we can do both. Okay. What's the status of Manhattan Toy? How are the holiday sales and anything you can share with? Also the placement through Walmart. I'll take the easy one first. The placement at Walmart's doing well. We expect to keep that placement in Walmart at least for another year. We found that out. We still think we have opportunities to get more placement. We think that's going well. The holiday sales were disappointing. That's where we saw the biggest decline in sales was at the Manhattan Toy brand. We think that most people were trading down to maybe the less expensive lines of toys. It just didn't go as well as it had the year before. That's where I think our biggest disappointment was for this holiday season. That being said, we continue to develop new products. We think that we've done a really good job of refreshing that. We've had positive, I guess, so the customer itself, the retailers, the specialty stores, etc., they have positive things to say about the new development. I think there's still an opportunity there. It just didn't come this holiday season. Okay. What about working with a distributor overseas for the Manhattan Toy? Has that been effective for the company? Yes. We closed the London office, and we've gone strictly to a distributor system based on the international front. Yes, our distributors have had most of them are picking up some of the Manhattan Toy sales. That is definitely a bigger opportunity to continue to grow. Okay. What about what's the relationship? What's happening with Legoland at this point? Legoland continues to grow. They're building new parks. I think we expect the Shanghai park to open here in 2025. We continue to grow there. Yeah. Were the fourth quarter sales up at Legoland? A lot of the Legoland parks are closed for the winter. You have a couple of the ones in the U.S. I think Florida and California stay open during the winter season, but the rest of them are closed. I think they open mainly April to October. Okay. I have a few more questions, but maybe I could let somebody else ask some questions, and I can come back for some more. Okay. Our next question comes from John Deysher from Pinnacle. Please go ahead with your question. Good morning, everyone. I just have a quick question on the real estate. I just want to confirm when the various leases are expiring. I understand the Compton lease expires in June of 2028. The Minneapolis headquarters expires June of 2027, and Eden Valley warehouse expires June of 2026. Are all those correct? I believe the Minneapolis is March of 2027, but yeah, that's close. The Eden Valley and the Compton ones are correct. Compton is definitely June 2026. Compton is definitely the June quarter of 2028. You're right. That office one is in that. It's in that range. Okay. So they're all pretty close. I mean, given that Eden Valley is going to expire in about a year and a quarter or so, it sounds like you're going to be making a decision on the new warehouse pretty soon? Yes. I think we'll make a decision on the final location pretty soon. We'll have to sublease in Compton in the meantime, so we're going to have to get the timing right. If for whatever reason the Eden Valley warehouse expires before we are ready, we'll take some kind of interim step. We're thinking through that process, but it could be that we go ahead and move those goods to the final location, but use a 3PL temporarily until the warehouse is ready. It is kind of a balancing act that we're working through. Right. I understand. Is it fair to say we might know by your fiscal year-end what the decision's going to be? I think it's a possibility. Okay. All right. Yeah. I mean, if not June, by August, I think we'll be able to tell you the final location. Okay. So mid-year. And what about the Minneapolis headquarters? What's that transition going to be? We need to get into a smaller space. It was too big for the personnel that was there on the date of acquisition, certainly too big for what we have now. We were working to try to come up with a solution to downsize sooner rather than later, but that did not really work out. We are stuck there until the lease runs out, but we will not go back into that particular location. We could get a much smaller, less expensive location, and quite frankly, out of downtown, maybe on the outskirts. Okay. You are going to keep it in Minneapolis. You are not going to move everybody to Gonzales? No. We won't move everybody to Gonzales. It'll be a small office, but we'll need to keep Compton. Okay. All right. Good. I think that was it. Thank you for your answers. Thank you. Thank you. Our next question is a follow-up from Doug Ruth from Lenox Financial Services. Please go ahead with your follow-up. Okay. You had talked about developing some new toys. Is there any certain toy that you have in development that you're especially excited about? On the toy side specifically, I think we're really excited about the new doll lines that is actually starting to ship now. We redesigned the Stella program, and we think that it's going to be a better option for specifically in the specialty store side. Mostly on the toy side, if you're looking at Manhattan Toy, we're really just still refreshing the line. There's only so many new products that you can develop and get into production each year. We're still working on just the overall refresh of those products. Sassy just continues to knock it out of the ballpark, and everything we develop is really working out well. What is it specifically about the Stella doll that is a selling point, do you think? I mean, the biggest thing is that there were two sizes of dolls. There was, I forget what the second one is, but one of them was smaller than the other one, and the price differential was pretty great on it. Everybody stopped buying the bigger doll and started getting the smaller doll. What we have done is we have just refreshed really the size of the dolls, and we have moved manufacturing facilities so that we can hit the price point better. The difference in price between the bigger doll and the smaller doll is not as great. So possibly you'll sell more of the bigger dolls? What happened in that case was the dolls looked the same, except for they were two different sizes. Everybody traded down to the smaller size. We are still going to have two separate dolls, but we are gearing them mainly. One is the baby's first doll, and it is more of an infant doll. It does not have removable clothes. It does not have hair. You kind of grow into the next size doll as you become a toddler. We have differentiated the dolls more. Okay. All right. Now, I noticed quite a change in the marketing expense in the third quarter. Did you feel like that spend was approximately at the right level now? Third quarter this year versus third quarter last year? Yes. Yeah. It looked like the marketing expense was lower, if I read that correctly. No, it's actually up a little bit, and mostly the difference is mostly going to be the continued integration costs for Baby Boom. Otherwise, marketing expenses were flat. I misspoke. I meant the advertising expense. I'm sorry. No, I think we're going to have to spend a little bit more on advertising to drive those online sales. I think that's probably where we missed the mark the most is when we first acquired Manhattan Toy, advertising costs were more than the sale. I think we pulled back on that spend, and I think we've pulled back too far. I think in order to drive higher sales online, we're going to have to do some more spend. Yeah. You explained previously that this was sort of an experiment, and you were so possibly if you would have spent more, possibly the Manhattan Toy sales might have been higher than they actually were? I think it's likely, yes. Okay. When you talk about just the big picture, on an annual basis, what should the marketing and administrative expense, what should that be as a% of revenue? That's something we're probably not going to answer because we just don't forecast. Okay. How about when we talk about the one large category, bibs, toys, or disposables, was most of the decline then in the, well, are you able to provide any kind of additional breakdown of the decline from the three different categories? The decline in bibs, toys, and disposables was primarily the Manhattan Toy brand. We also had a small part of the decline that was going to be the last bit of run-out for the loss of the Target bib program that we lost in November of 2023. Q3 of last fiscal year had about half of the quarter with bib sales, whereas this year we had none for that one customer. The vast majority of it was the Manhattan Toy brand. Okay. I think that you folks are doing a terrific job. I like the progression of what's happening with the warehouse. I really appreciate the care that you're taking for the shareholders, really trying to make the best decision that you can to get the right location for the warehouse. I am very grateful for what you're doing there for the shareholders. Thank you, Doug. Thanks, Doug. Okay. That's the end of my questions. Thank you. Thanks. Our next question is another follow-up from John Deysher from Pinnacle. Please go ahead with your follow-up. Good morning. Regarding the tariffs, the 10% increase, I guess, when does that go into effect? I guess, what measures are you taking to either offset that or share it with vendors? What are the options? It goes into effect pretty much immediately. Actually, our initial conversations with our suppliers out of China indicate that we're probably going to be able to roll back prices, our initial first cost, purchase prices out of China, enough to cover the vast majority of it. While we may have to raise some prices to our retailers to a small degree, depending on category, depending on supplier, we are hopeful that we can minimize the impact to our customers and to the consumer. It feels like that's really a likely option based on our initial conversations with suppliers. Okay. Good. That's encouraged. When will that go into effect one way or the other, the rollback of the purchase prices? Immediately. I mean, we need to have those rollbacks pretty much concurrent with the increase in the tariffs. There may be some product that was already either on the ocean or some that was already in production that we may not be able to roll back that quickly. Oftentimes we do say, "Look, you've got to lower the price on what's already in production," but certainly for any new production. Right. But do you have those agreements in writing at this point? We don't actually have agreements with our suppliers. It's on a PO-by-PO basis, which makes it much easier to change as soon as possible. Okay. The POs that you've submitted recently have been okayed by the vendors? We have not submitted any with the new lower prices, but we can. I mean, absolutely. We can go back and change the prices. We have done it before. Okay. Okay. All right. Okay. That's fine. It sounds like it's a work in process at this point. Yes. Absolutely. It's kind of ever-changing here for the past couple of weeks. Right. Okay. Great. I appreciate it. Good luck. Thank you. Thanks. Ladies and gentlemen, with that, we'll be concluding today's question and answer session. At this time, I'd like to turn the floor back over to Olivia Elliott for any closing remarks. Thank you, Jamie. Thank you for your continued interest in our company. We look forward to speaking with you again when we report our fourth quarter and fiscal year 2025 results in June.