Charles & Colvard Ltd. (NASDAQ:CTHR) Q1 2020 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 04:30 pm ET

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Charles & Colvard Ltd. (NASDAQ:CTHR) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the Charles & Colvard Q1 FY2020 Earnings Call. [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 as 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 developments and actual results could differ materially from those set forth and contemplated by or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate. This earnings call does not constitute an offer to purchase any securities nor 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 ir.charlesandcolvard.com/events. The company will be hosting a Q&A session at the conclusion of the prepared remarks. [Operator Instructions]

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

Executive
Suzanne Miglucci

Good afternoon, and thank you for joining us as we summarize Charles & Colvard's results for the first quarter of fiscal year 2020 ended September 30, 2019. In the first quarter, we delivered our fifth consecutive quarter of profitability, revenue growth of 15% and a very favorable blended gross margin of 49%. This positive momentum was achieved during a quarter of investment as we began applying some of the proceeds raised earlier this summer in order to expand our brand presence and grow the top-line.

Clint Pete, our CFO, will begin today's call with an overview of our financials. Then I'll return to discuss highlights from the quarter and share key initiatives we're undertaking to position us for growth. Clint?

Executive
Clint J. Pete

Thank you, Suzanne. Good afternoon, everyone, and thank you for joining us. Today I will highlight the key financial results for Q1 2020. Additional details can be found in our Form 10-Q for the quarter ended September 30, 2019, which we expect to file tomorrow.

Beginning on Slide 5, we reported net income for Q1 2020 of approximately $207,000 or $0.01 per diluted share compared with net income of approximately $110,000 or $0.01 per diluted share in the year-ago quarter. This represents our fifth consecutive quarter of profitability.

Slide 6 summarizes net sales for Q1 2020, which increased 15% to $7.6 million compared to the year-ago quarter. In our Online Channels segment, which consists of e-commerce outlets, including charlesandcolvard.com, third-party online marketplaces, drop-ship retail and other pure-play, exclusively e-commerce outlets, net sales for the quarter increased 20% versus the year-ago quarter, representing 49% of total net sales.

Our transactional website, charlesandcolvard.com, increased