CSS Industries Inc. (NYSE:CSS) Q3 2019 Earnings Conference Call Transcript
Feb 08, 2019 • 08:30 am ET
Good morning. My name is Shelly, and I will be your conference operator today. At this time, I would like to welcome everyone to CSS Industries' Fiscal 2019 Third Quarter Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions)
Thank you. Keith Pfeil, you may begin your conference.
Keith W. Pfeil
Good morning and thank you for joining our conference call to discuss CSS Industries' third quarter results for fiscal year 2019 and our outlook for the full year. Sitting with me today is Chris Munyan, our President and Chief Executive Officer.
During the course of this call, we will be providing certain forward looking information. We ask you to look at yesterday's press release and read through the forward looking cautionary statements that we've included there.
In addition, we will use certain non-GAAP measures in our discussion this morning and we ask you to read through the sections of our press release that address the use of these items.
The press release and related tables can be found on our Investor Relations portion of our website at cssindustries.com.
Chris will begin our discussion by providing some opening comments related to our quarter.
Christopher J. Munyan
Thanks Keith. Good morning everyone. Our third quarter did not perform as expected and we were disappointed with the results. Overall net sales for the third quarter increased 2%, driven by the contribution from Simplicity which was acquired in November 2017.
Organic sales declined 4% year-over-year, driven primarily by lower craft and gift sales, partially offset by higher seasonal sales, due to the later timing of Christmas ribbon and bow shipments, as commented during our last earnings call.
Adjusted EBITDA for the quarter was down $4.8 million from last year's third quarter. The key driver of this was margin decline driven by the mix of lower base sales volumes within our craft and gift categories, partially offset by the contributions from the Simplicity acquisition, as well as higher seasonal sales.
Although, our results for the third quarter did not beat expectations, I would like to take some time to provide insights and updates into our long-term strategy by discussing several key initiatives mentioned in yesterday's press release.
First and foremost, I'm pleased to announce that during the quarter, the company selected JPMorgan Chase Bank as administrative agent to lead a new $125 million syndicated asset-based revolving credit facility. The team was heavily focused on commencing asset appraisals and diligence proceedings during the quarter. More recently, the company executed a proposal letter with JPMorgan Chase, is actively marketing this new facility with additional lenders. We fully anticipate to close this facility during our fiscal fourth quarter.
While we work towards finalization, we are aggressively paying down our debt. I want to highlight that we ended December with a total loan balance of $58.7 million and cash of $18.9 million. However, by January 31st, our total loan balance decreased by $15.5 million to $43.2 million with