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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Charles and Colvard Ltd | NASDAQ:CTHR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.15 | 2.10 | 3.14 | 0 | 01:00:00 |
Conference Call with Accompanying Slide Presentation Scheduled Today at 4:30 PM ET
RESEARCH TRIANGLE PARK, N.C., Oct. 12, 2023 /PRNewswire/ -- Charles & Colvard, Ltd. (Nasdaq: CTHR) (the "Company"), a globally recognized fine jewelry company that specializes in moissanite and lab grown diamonds, reported financial results for the fourth quarter ended June 30, 2023 ("Fourth Quarter Fiscal 2023").
Management Commentary
"While the challenging macroeconomic backdrop and weakened consumer outlook created significant headwinds on the jewelry and gemstone industry, and on the Company's Q4 and fiscal year 2023 revenues, the Company's cash position remained strong at $15.6 million. The downward pricing pressure on moissanite and lab grown diamond impacted margins and, as a result, the Company recently reevaluated its supply chain, gemstone cost, pricing methodology and go-to-market strategy," said Don O'Connell, President and CEO of the Company.
"We firmly believe that our proactive measures, combined with our unwavering determination, will enable us to overcome the obstacles that we and the industry have encountered and pave the way for a brighter future. We are confident that our long-term business strategy will create long-term value for our shareholders. As we continue to look ahead, we remain optimistic and excited about the future prospects of the Company and our commitment to the Company's strategic initiatives," concluded O'Connell.
Recent Corporate Highlights
Financial Summary for Fourth Quarter Fiscal 2023
(Quarter Ended June 30, 2023 Compared to Quarter Ended June 30, 2022)
Financial Summary for Fiscal Year 2023
Financial Position
Cash, cash equivalents and restricted cash totaled $15.6 million as of June 30, 2023, representing a decrease of $5.6 million from $21.2 million as of June 30, 2022. Total inventory decreased to $26.8 million as of June 30, 2023, down from $33.5 million as of June 30, 2022. The Company had no debt outstanding as of June 30, 2023.
Investor Conference Call
Charles & Colvard will host an investor conference call and webcast presentation to discuss its financial results for the quarter and fiscal year ended June 30, 2023 at 4:30 p.m. ET on Thursday, October 12, 2023.
Live Call-In Information: Interested parties can access the conference call by dialing (844) 875-6912 (U.S. toll-free) or (412) 317-6708 (international) and asking to be joined into the Charles & Colvard call.
Live Webcast Information: Interested parties can access the conference call and accompanying presentation slides via a live webcast, which is available in the Investor Relations section of the Company's website at https://ir.charlesandcolvard.com/events or https://www.webcaster4.com/Webcast/Page/346/49015.
A replay of this conference call will be available until October 19, 2023 at (877) 344-7529 (U.S. toll-free) or (412) 317-0088 (international). The replay conference code is 2485294. A webcast replay will be available in the Investor Relations section of the Company's website at https://ir.charlesandcolvard.com/events.
About Charles & Colvard, Ltd.
Charles & Colvard, Ltd. (Nasdaq: CTHR) believes that fine jewelry should be as ethical as it is exquisite. Charles & Colvard is the original creator of lab grown moissanite (a rare gemstone formed from silicon carbide). The Company brings revolutionary gems and fine jewelry to market by using exclusively Made, not MinedTM above ground gemstones and a dedication to 100% recycled precious metals. Their Forever One™ moissanite and Caydia® lab grown diamond brands provide exceptional quality, incredible value and a conscious approach to bridal, high fashion, and everyday jewelry. Charles & Colvard was founded in 1995 and is based in North Carolina's Research Triangle Park region. For more information, please visit www.charlesandcolvard.com.
Forward-Looking Statements
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," "intend," "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, (1) our business and our results of operations could be materially adversely affected as a result of general economic and market conditions; (2) our future financial performance depends upon increased consumer acceptance, growth of sales of our products, and operational execution of our strategic initiatives; (3) we face intense competition in the worldwide gemstone and jewelry industry; (4) our information technology, or IT, infrastructure, and our network has been and may be impacted by a cyber-attack or other security incident as a result of the rise of cybersecurity events; (5) constantly evolving privacy regulatory regimes are creating new legal compliance challenges; (6) we have historically been dependent on a single supplier for substantially all of our silicon carbide, or SiC, crystals, the raw materials we use to produce moissanite jewels; if our supply of high-quality SiC crystals is interrupted, our business may be materially harmed; (7) we are subject to certain risks due to our international operations, distribution channels and vendors; (8) our business and our results of operations could be materially adversely affected as a result of our inability to fulfill orders on a timely basis; (9) we are currently dependent on a limited number of distributor and retail partners in our Traditional segment for the sale of our products; (10) we may experience quality control challenges from time to time that can result in lost revenue and harm to our brands and reputation; (11) the effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events on our business, operating results, and cash flows are uncertain; (12) seasonality of our business may adversely affect our net sales and operating income; (13) our operations could be disrupted by natural disasters; (14) sales of moissanite and lab grown diamond jewelry could be dependent upon the pricing of precious metals, which is beyond our control; (15) our current customers may potentially perceive us as a competitor in the finished jewelry business; (16) if the e-commerce opportunity changes dramatically or if e-commerce technology or providers change their models, our results of operations may be adversely affected; (17) governmental regulation and oversight might adversely impact our operations; (18) the execution of our business plans could significantly impact our liquidity; (19) we are subject to arbitration, litigation and demands, which could result in significant liability and costs, and impact our resources and reputation; (20) the financial difficulties or insolvency of one or more of our major customers or their lack of willingness and ability to market our products could adversely affect results; (21) negative or inaccurate information on social media could adversely impact our brand and reputation; (22) we rely on assumptions, estimates, and data to calculate certain of our key metrics and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business; (23) we may not be able to adequately protect our intellectual property, which could harm the value of our products and brands and adversely affect our business; (24) environmental, social, and governance matters may impact our business, reputation, financial condition, and results of operations; (25) if we fail to evaluate, implement, and integrate strategic acquisition or disposition opportunities successfully, our business may suffer; (26) our failure to maintain compliance with The Nasdaq Stock Market's continued listing requirements could result in the delisting of our common stock; (27) some anti-takeover provisions of our charter documents may delay or prevent a takeover of our Company; and (28) we cannot guarantee that our share repurchase program will be utilized to the full value approved, or that it will enhance long-term stockholder value and repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance, in addition to the other risks and uncertainties described in more detail in our filings with the U.S. Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 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 Securities and Exchange Commission, or SEC, that discuss other factors relevant to our business.
- Financial Tables Follow –
Appendix A | ||||||||||||
CHARLES & COLVARD, LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
Three Months Ended June 30, | Year Ended June 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Net sales | $ | 5,564,231 | $ | 9,303,743 | $ | 29,946,234 | $ | 43,089,024 | ||||
Cost of goods sold | 10,561,473 | 5,498,676 | 25,212,383 | 22,845,702 | ||||||||
Gross (loss) profit | (4,997,242) | 3,805,067 | 4,733,851 | 20,243,322 | ||||||||
Operating expenses: | ||||||||||||
Sales and marketing | 2,970,983 | 2,679,364 | 13,686,049 | 12,421,138 | ||||||||
General and administrative | 1,369,034 | 1,068,296 | 5,023,822 | 4,948,980 | ||||||||
Total operating expenses | 4,340,017 | 3,747,660 | 18,709,871 | 17,370,118 | ||||||||
(Loss) Income from operations | (9,337,259) | 57,407 | (13,976,020) | 2,873,204 | ||||||||
Other income (expense): | ||||||||||||
Interest income | 128,327 | 17,313 | 297,262 | 19,277 | ||||||||
Loss on foreign currency exchange | - | - | - | (34) | ||||||||
Total other income, net | 128,327 | 17,313 | 297,262 | 19,243 | ||||||||
(Loss) Income before income taxes | (9,208,932) | 74,720 | (13,678,758) | 2,892,447 | ||||||||
Income tax expense | (43,881) | (33,950) | (5,902,036) | (518,532) | ||||||||
Net (loss) income | $ | (9,252,813) | $ | 40,770 | $ | (19,580,794) | $ | 2,373,915 | ||||
Net (loss) income per common share: | ||||||||||||
Basic | $ | (0.30) | $ | 0.00 | $ | (0.64) | $ | 0.08 | ||||
Diluted | $ | (0.30) | $ | 0.00 | $ | (0.64) | $ | 0.08 | ||||
Weighted average number of shares used | ||||||||||||
Basic | 30,344,954 | 30,534,331 | 30,376,745 | 30,363,076 | ||||||||
Diluted | 30,344,954 | 31,224,390 | 30,376,745 | 31,316,028 | ||||||||
CHARLES & COLVARD, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
June 30, | ||||||
2023 | 2022 | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 10,446,532 | $ | 15,668,361 | ||
Restricted cash | 5,122,379 | 5,510,979 | ||||
Accounts receivable, net | 380,085 | 2,220,816 | ||||
Inventory, net | 7,476,046 | 11,024,276 | ||||
Note receivable | 250,000 | 250,000 | ||||
Prepaid expenses and other assets | 901,354 | 1,190,012 | ||||
Total current assets | 24,576,396 | 35,864,444 | ||||
Long-term assets: | ||||||
Inventory, net | 19,277,530 | 22,488,524 | ||||
Property and equipment, net | 2,491,569 | 1,901,176 | ||||
Intangible assets, net | 305,703 | 265,730 | ||||
Operating lease right-of-use assets | 2,183,232 | 2,787,419 | ||||
Deferred income taxes, net | - | 5,851,904 | ||||
Other assets | 49,658 | 49,658 | ||||
Total long-term assets | 24,307,692 | 33,344,411 | ||||
TOTAL ASSETS | $ | 48,884,088 | $ | 69,208,855 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 4,786,155 | $ | 4,401,229 | ||
Operating lease liabilities, current portion | 880,126 | 856,571 | ||||
Accrued expenses and other liabilities | 1,395,479 | 1,546,483 | ||||
Total current liabilities | 7,061,760 | 6,804,283 | ||||
Long-term liabilities: | ||||||
Noncurrent operating lease liabilities | 2,047,742 | 2,846,805 | ||||
Total long-term liabilities | 2,047,742 | 2,846,805 | ||||
Total liabilities | 9,109,502 | 9,651,088 | ||||
Commitments and contingencies | ||||||
Shareholders' equity: | ||||||
Common stock, no par value; 50,000,000 shares authorized; | 57,242,211 | 57,242,211 | ||||
Additional paid-in capital | 26,205,919 | 25,956,491 | ||||
Treasury stock, at cost, 388,403 shares and 30,287 shares at June 30, | (489,979) | (38,164) | ||||
Accumulated deficit | (43,183,565) | (23,602,771) | ||||
Total shareholders' equity | 39,774,586 | 59,557,767 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 48,884,088 | $ | 69,208,855 |
CHARLES & COLVARD, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
Year Ended June 30, | ||||||
2023 | 2022 | |||||
(unaudited) | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net (loss) income | $ | (19,580,794) | $ | 2,373,915 | ||
Adjustments to reconcile net (loss) income to net cash (used in) provided by | ||||||
Depreciation and amortization | 653,157 | 479,308 | ||||
Stock-based compensation | 249,428 | 774,341 | ||||
Provision for uncollectible accounts | 98,000 | 14,000 | ||||
Recovery of sales returns | (23,000) | (84,000) | ||||
Inventory write-downs | 6,004,000 | 195,000 | ||||
Recovery of accounts receivable discounts | (4,496) | (4,285) | ||||
Deferred income taxes | 5,851,904 | 498,926 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 1,770,227 | (484,457) | ||||
Inventory | 755,224 | (4,535,080) | ||||
Prepaid expenses and other assets, net | 892,845 | 926,780 | ||||
Accounts payable | 384,926 | 1,626,856 | ||||
Accrued income taxes | - | (9,878) | ||||
Accrued expenses and other liabilities | (926,512) | (1,198,873) | ||||
Net cash (used in) provided by operating activities | (3,875,091) | 572,553 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchases of property and equipment | (1,229,571) | (1,496,471) | ||||
Payments for intangible assets | (53,952) | (64,188) | ||||
Net cash used in investing activities | (1,283,523) | (1,560,659) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Repurchases of common stock | (451,815) | (38,164) | ||||
Stock option exercises | - | 758,659 | ||||
Net cash (used in) provided by financing activities | (451,815) | 720,495 | ||||
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (5,610,429) | (267,611) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF | 21,179,340 | 21,446,951 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | $ | 15,568,911 | $ | 21,179,340 | ||
Supplemental disclosure of cash flow information: | ||||||
Cash paid during the year for taxes | $ | 5,900 | $ | - | ||
Reconciliation to Condensed Consolidated Balance Sheets: | June 30, 2023 | June 30, 2022 | ||||
Cash and cash equivalents | $ | 10,446,532 | $ | 15,668,361 | ||
Restricted cash | 5,122,379 | 5,510,979 | ||||
$ | 15,568,911 | $ | 21,179,340 | |||
Appendix B | |||||||||||||
CHARLES & COLVARD, LTD. | |||||||||||||
The Company evaluates the financial performance of its segments based on net sales and product line gross | |||||||||||||
Summary unaudited financial information by reportable segment for the three months ended June 30, 2023 is as follows: | |||||||||||||
Three Months Ended June 30, 2023 | |||||||||||||
Online Channels | Traditional | Total | |||||||||||
Net sales | |||||||||||||
Finished Jewelry | $ | 3,950,598 | $ | 737,101 | $ | 4,687,699 | |||||||
Loose jewels | 227,570 | 648,962 | 876,532 | ||||||||||
Total | $ | 4,178,168 | $ | 1,386,063 | $ | 5,564,231 | |||||||
Product line cost of goods sold | |||||||||||||
Finished jewelry | $ | 1,917,937 | $ | 846,802 | $ | 2,764,739 | |||||||
Loose jewels | 82,447 | 320,398 | 402,845 | ||||||||||
Total | $ | 2,000,384 | $ | 1,167,200 | $ | 3,167,584 | |||||||
Product line gross profit (loss) | |||||||||||||
Finished jewelry | $ | 2,032,661 | $ | (109,701) | $ | 1,922,960 | |||||||
Loose jewels | 145,123 | 328,564 | 473,687 | ||||||||||
Total | $ | 2,177,784 | $ | 218,863 | $ | 2,396,647 | |||||||
Depreciation and amortization | $ | 48,209 | $ | 127,663 | $ | 175,872 | |||||||
Capital expenditures | $ | 249,340 | $ | 96,201 | $ | 345,541 | |||||||
CHARLES & COLVARD, LTD. | |||||||||||||
Summary unaudited financial information by reportable segment for the three months ended June 30, 2022 is as follows: | |||||||||||||
Three Months Ended June 30, 2022 | |||||||||||||
Online Channels |
Traditional | Total | |||||||||||
Net sales | |||||||||||||
Finished Jewelry | $ | 4,879,657 | $ | 1,186,529 | $ | 6,066,186 | |||||||
Loose jewels | 852,118 | 2,385,439 | 3,237,557 | ||||||||||
Total | $ | 5,731,775 | $ | 3,571,968 | $ | 9,303,743 | |||||||
Product line cost of goods sold | |||||||||||||
Finished jewelry | $ | 2,132,703 | $ | 1,051,674 | $ | 3,184,377 | |||||||
Loose jewels | 332,228 | 1,329,565 | 1,661,793 | ||||||||||
Total | $ | 2,464,931 | $ | 2,381,239 | $ | 4,846,170 | |||||||
Product line gross profit | |||||||||||||
Finished jewelry | $ | 2,746,954 | $ | 134,855 | $ | 2,881,809 | |||||||
Loose jewels | 519,890 | 1,055,874 | 1,575,764 | ||||||||||
Total | $ | 3,266,844 | $ | 1,190,729 | $ | 4,457,573 | |||||||
Depreciation and amortization | $ | 61,857 | $ | 67,253 | $ | 129,110 | |||||||
Capital expenditures | $ | 191,141 | $ | 55,034 | $ | 246,175 | |||||||
CHARLES & COLVARD, LTD. | |||||||||||||
Summary unaudited financial information by reportable segment for the year ended June 30, 2023 is as follows: | |||||||||||||
Year Ended June 30, 2023 | |||||||||||||
Online Channels | Traditional | Total | |||||||||||
Net sales | |||||||||||||
Finished Jewelry | $ | 19,607,941 | $ | 4,377,673 | $ | 23,985,614 | |||||||
Loose jewels | 1,884,939 | 4,075,681 | 5,960,620 | ||||||||||
Total | $ | 21,492,880 | $ | 8,453,354 | $ | 29,946,234 | |||||||
Product line cost of goods sold | |||||||||||||
Finished jewelry | $ | 9,214,749 | $ | 3,182,342 | $ | 12,397,091 | |||||||
Loose jewels | 705,576 | 2,039,401 | 2,744,977 | ||||||||||
Total | $ | 9,920,325 | $ | 5,221,743 | $ | 15,142,068 | |||||||
Product line gross profit | |||||||||||||
Finished jewelry | $ | 10,393,192 | $ | 1,195,331 | $ | 11,588,523 | |||||||
Loose jewels | 1,179,363 | 2,036,280 | 3,215,643 | ||||||||||
Total | $ | 11,572,555 | $ | 3,231,611 | $ | 14,804,166 | |||||||
Depreciation and amortization | $ | 215,978 | $ | 437,179 | $ | 653,157 | |||||||
Capital expenditures | $ | 423,150 | $ | 806,421 | $ | 1,229,571 | |||||||
CHARLES & COLVARD, LTD. | |||||||||||||||
Summary financial information by reportable segment for the year ended June 30, 2022 is as follows: | |||||||||||||||
Year Ended June 30, 2022 | |||||||||||||||
Online Channels | Traditional | Total | |||||||||||||
Net sales | |||||||||||||||
Finished jewelry | $ | 23,539,347 | $ | 6,172,883 | $ | 29,712,230 | |||||||||
Loose jewels | 3,240,702 | 10,136,092 | 13,376,794 | ||||||||||||
Total | $ | 26,780,049 | $ | 16,308,975 | $ | 43,089,224 | |||||||||
Product line cost of goods sold | |||||||||||||||
Finished jewelry | $ | 9,837,830 | $ | 4,094,870 | $ | 13,932,700 | |||||||||
Loose jewels | 1,209,832 | 4,959,958 | 6,169,790 | ||||||||||||
Total | $ | 11,047,662 | $ | 9,054,828 | $ | 20,102,490 | |||||||||
Product line gross profit | |||||||||||||||
Finished jewelry | $ | 13,701,517 | $ | 2,078,013 | $ | 15,779,530 | |||||||||
Loose jewels | 2,030,870 | 5,176,134 | 7,207,004 | ||||||||||||
Total | $ | 15,732,387 | $ | 7,254,147 | $ | 22,986,534 | |||||||||
Depreciation and amortization | $ | 235,643 | $ | 243,665 | $ | 479,308 | |||||||||
Capital expenditures | $ | 305,586 | $ | 1,190,885 | $ | 1,496,471 | |||||||||
CHARLES & COLVARD, LTD. | |||||||
An unaudited reconciliation of the Company's total product line cost of goods sold by reportable segment to its | |||||||
Three Months Ended June 30, 2023 | Year Ended June 30, 2023 | ||||||
Product line cost of goods sold by reportable segment | $ | 3,167,584 | $ | 15,142,068 | |||
Non-capitalized manufacturing and production control expenses | 550,263 | 2,210,494 | |||||
Freight out | 217,266 | 1,068,437 | |||||
Inventory write-downs | 5,885,000 | 6,004,000 | |||||
Other inventory adjustments | 741,360 | 787,384 | |||||
Consolidated cost of goods sold | $ | 10,561,473 | $ | 25,212,383 | |||
Three Months Ended June 30, 2022 | Year Ended June 30, 2022 | ||||||
Product line cost of goods sold by reportable segment | $ | 4,846,170 | $ | 20,102,490 | |||
Non-capitalized manufacturing and production control expenses | 417,679 | 1,661,207 | |||||
Freight out | 218,207 | 1,195,062 | |||||
Inventory (reserve release) write-downs | (37,000) | 195,000 | |||||
Other inventory adjustments | 53,620 | (308,057) | |||||
Consolidated cost of goods sold | $ | 5,498,676 | $ | 22,845,702 |
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SOURCE Charles & Colvard, Ltd.
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