Charles & Colvard Ltd. (NASDAQ:CTHR) Q2 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 04:30 pm ET


Charles & Colvard Ltd. (NASDAQ:CTHR) Q2 2019 Earnings Conference Call Transcript


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Good afternoon, and welcome to the Charles & Colvard Second Quarter Fiscal Year 2019 Earnings Conference Call. All participants will be in a listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions)

This earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the company's business strategy and growth strategy. Expressions which identify forward-looking statements speak only as of the date the statement is made. These forward-looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties, some of which cannot be predicted or quantified and are beyond our control. Future development and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking statement information can prove to be accurate.

This earnings call does not constitute an offer to purchase any securities nor a solicitation of a proxy, consent, authorization or agent designation with respect to a meeting of the company's shareholders. Accompanying today's call is a supporting PowerPoint slide deck, which is available in the Investor Relations section of the company's website at Please note, this event is being recorded.

I would now like to turn the conference over to Suzanne Miglucci, President and CEO. Please go ahead.

Suzanne Miglucci

Good afternoon, and thank you for joining us as we summarize Charles & Colvard's results for the quarter ended December 31, 2018, the second quarter of our 2019 fiscal year. We're pleased to report today's results, which include performance from the holiday selling season. We had a robust quarter, with strong revenue growth, excellent gross margin, positive cash flow and consecutive quarterly profitability.

This underscores the strength and scalability we've built into our business model and the growing demand for lab-created gemstones. We're pleased to see our strategy delivering strong results and look forward to sharing our outcomes with you. Clint Pete, our CFO, will begin today's call with an overview of our financials. Then I'll return to discuss key highlights from the quarter.


Clint Pete

Thank you, Suzanne. Good afternoon, everyone, and thank you for joining us. My comments today will focus on highlighting the key financial results in Q2 2019. Additional detail can be found on our Form 10-Q for the quarter ended December 31, 2018, when it becomes available.

Beginning on slide 5. We reported net income for Q2 2019 of approximately $1.2 million or $0.05 per diluted share, compared with a net income of approximately $680,000, or $0.03 per diluted share in the year ago quarter.

Slide 6 summarizes net sales for Q2 2019 compared to the year ago quarter, which increased 19% to $10.1 million. Our Online Channels segment, which consists of e-commerce outlets including, third-party online marketplaces, drop-ship and other pure-play, exclusively e-commerce outlets, generated an increase of 18% in net sales