RESEARCH TRIANGLE PARK, N.C., Feb. 07, 2019 (GLOBE NEWSWIRE) Charles & Colvard, Ltd. (Nasdaq: CTHR), the original and leading worldwide source of created moissanite, reported financial results for the quarter ended December 31, 2018 (“second quarter Fiscal 2019”). For the second quarter Fiscal 2019, the Company reported net sales of $10.1 million and net income of $1.2 million, or $0.05 per diluted share.
Suzanne Miglucci, President and CEO of Charles & Colvard, said, “We had a robust quarter with strong revenue growth of 19%, an impressive gross margin level of 47%, positive cash flow and consecutive quarterly profitability. We believe these financial achievements were the result of strategic focus and operational excellence. We applied our learnings from prior holiday seasons and leveraged technology to enhance our e-commerce website, execute more effective marketing campaigns, balance our inventory and offer a seamless customer experience.”
“The revenue growth was driven by strength in both our Online Channels and Traditional segments, which indicates the growing acceptance of our lab-created gemstones. Our proprietary Signature Collection and expanded Forever One™ designs have been very well received in the market and are expanding finished jewelry sales, which had a positive impact on margins. For our brick and mortar presence, we benefited from a broader product selection, better in-store placement, including expanded bridal assortments, and new styles delivered in the quarter that performed well,” Ms. Miglucci continued.
“In terms of long-term strategic growth, we were pleased to see global engagement and increasing brand awareness, even as our international expansion is still in the early stages. International revenues increased 124% to represent 13% of sales, with strong demand from international distributors. Cross border trade, which results from customers outside the U.S. ordering products from our domestic e-commerce site, increased more than 250% as a result of our adoption of a new technology platform enabling streamlined distribution, expanded payment and currency options. We supported this initiative with targeted in-country advertising designed to build brand awareness and demand.”
“As this quarter demonstrates, we are successfully transforming Charles & Colvard into a growing e-commerce company with unique products and an established brand. We are proud of the Company’s track record of executing and delivering results. We are using data-driven strategies and actions that are leading to better margins and improved return on investment. With numerous opportunities for growth and an improving financial position, we believe we are well-positioned for the future,” Ms. Miglucci concluded.
Recent Corporate Highlights
Financial Summary for Second Quarter Fiscal 2019
(Quarter Ended December 31, 2018 Compared to Quarter Ended December 31, 2017)
Financial Summary for the First Six Months of Fiscal 2019
(Six Months Ended December 31, 2018 Compared to Six Months Ended December 31, 2017)
Cash, cash equivalents and restricted cash totaled $3.0 million at December 31, 2018, representing an increase of $0.8 million from $2.2 million at September 30, 2018 and a decrease of $0.4 million from $3.4 million at June 30, 2018. The Company had no debt outstanding as of December 31, 2018. Total inventory was $32.8 million at December 31, 2018, compared with $32.8 million at September 30, 2018 and $31.8 million at June 30, 2018.
Investor Conference Call
Shareholders and other interested parties may participate in the upcoming investor conference call by dialing 844-875-6912 (U.S. toll-free) or 412-317-6708 (international) and asking to be connected to the “Charles & Colvard, Ltd. Conference Call” a few minutes before 4:30 p.m. ET on Thursday, February 7, 2019. Please note that there will be an accompanying slide presentation, which will be available in the Investor Relations section of the Charles & Colvard website at http://ir.charlesandcolvard.com/events.
A replay of this conference call will be available until February 14, 2019 at 877-344-7529 (U.S. toll-free) or 412-317-0088 (international). The replay conference ID is 10128080. The call will also be available live and for replay in the Investor Relations section of the Company’s website at http://ir.charlesandcolvard.com/events.
About Charles & Colvard, Ltd.
Charles & Colvard (Nasdaq: CTHR) believes luxury can be beautiful and conscientious. As an e-commerce-driven business, the Company uses innovative technology and sustainable practices to lead a revolution in the jewelry industry. As the original pioneer of lab-created moissanite, a rare gemstone formed from silicon carbide, Charles & Colvard delivers a brilliant product at a revolutionary value that meets the needs of today’s discerning customer. Jewelry consumers seek Charles & Colvard products because of their exceptional quality as well as their environmental and social responsibility. Charles & Colvard was founded in 1995 and is based in the Research Triangle Park, North Carolina. For more information, please visit www.charlesandcolvard.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations regarding our future and projections relating to our products, sales, revenues, and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations, and contentions and are not historical facts and typically are identified by use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “continue,” and similar words, although some forward-looking statements are expressed differently.
All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You should be aware that although the forward-looking statements included herein represent management’s current judgment and expectations, our actual results may differ materially from those projected, stated, or implied in these forward-looking statements as a result of many factors including, but not limited to, our dependence on consumer awareness, acceptance, and growth of sales of our products resulting from our strategic initiatives; the impact of the execution of our business plans on our liquidity; our ability to fulfill orders on a timely basis; our ability to maintain compliance with The Nasdaq Stock Market’s continued listing requirements; intense competition in the worldwide gemstone and jewelry industry; the financial condition of our major customers and their willingness and ability to market our products; dependence on a limited number of distributor and retail partners in our Traditional segment; dependence on our exclusive supply agreement with Cree, Inc., for the supply of our silicon carbide, or SiC, crystals; general economic and market conditions, including the current economic environment; quality control challenges from time to time that can result in lost revenue and harm to our brands and reputation; the potential impact of seasonality on our business; the impact of natural disasters on our operations; the pricing of precious metals, which is beyond our control; the impact of significant changes in e-commerce opportunities, technology, or models; the risk of a failure of our information technology infrastructure to protect confidential information and prevent security breaches; our current customers’ potential perception of us as a competitor in the finished jewelry business; risks of conducting business in foreign countries; the potential adverse effect of December 2017 U.S. tax legislation; our ability to protect our intellectual property; the potential adverse impact of negative or inaccurate social media commentary; the failure to evaluate, implement, and integrate strategic opportunities; possible adverse effects of governmental regulation and oversight; and the impact of anti-takeover provisions included in our charter documents, in addition to the other risks and uncertainties described in our filings with the Securities and Exchange Commission, or the SEC, including our Transition Report on Form 10-KT for the transition period ended June 30, 2018 and subsequent reports filed with the SEC. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by the federal securities laws, and you are urged to review and consider disclosures that we make in the reports that we file with the SEC that discuss other factors relevant to our business.
-Financial Tables Follow-
CHARLES & COLVARD, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|Three Months Ended December 31,||Six Months Ended December 31,|
|Costs and expenses:|
|Cost of goods sold||5,346,207||4,926,314||8,959,956||8,409,917|
|Sales and marketing||2,346,893||2,028,159||3,988,017||3,785,166|
|General and administrative||1,250,181||1,077,205||2,474,956||2,214,941|
|Research and development||1,422||81||1,422||570|
|Total costs and expenses||8,944,703||8,031,759||15,424,351||14,410,594|
|Income from operations||1,194,758||505,223||1,309,816||335,196|
|Other (expenses) income:|
|Loss on foreign currency||(74)||-||(102)||-|
|Gain on insurance settlement||-||183,217||-||183,217|
|Total other (expense) income||(426)||182,773||(813)||182,768|
|Income before income taxes||1,194,332||687,996||1,309,003||517,964|
|Income tax expense||(4,767)||(4,507)||(9,534)||(9,014)|
|Net income per common share:|
|Weighted average number of shares used in computing net income per common share:|
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