Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the symbol lookup tool.
Alphabetize the sort order of my symbols
AT Cross Co. (ATX)
Q2 2008 Earnings Call
July 23 2008 4:30 pm ET
Laurie Chute - Integrated Corporate Relations - IR
Dave Whalen - President and CEO
Kevin Mahoney - CFO
David Leibowitz - Burnham
Hamed Khorsand - BWS Financial
Eric Marshall - Hodges Capital Management
» AT Cross Co. Q4 2007 Earnings Call Transcript
» American Greetings Corporation F3Q10 (Qtr End 11/27/09) Earnings Call Transcript
It is now my pleasure to turn the floor over to [Laurie Chute] of Integrated Corporate Relations. Please, go ahead.
Great. Thank you. Before we begin, I'd like to take a moment to read the Safe Harbor Statement. Statements contained on this call that are not historical facts, are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expected gross margin improvement in Cross Accessory Division, the expected success of Cross Accessory Division brand extensions, the continued success of the Cross Accessory Division shop-in-shops, the continue optimization of the Cross China plant, and the expected continued growth of the Cross Optical Group.
In addition, words such as believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, consumers' reaction to the both divisions' new products, including Native products, the Optical segment's ability to maximize and develop the Native brand, the continued positive effect of foreign exchange, and the effects of the current economic environment on consumer confidence.
Additional discussions of factors that could cause actual results to differ materially from management's expectations are contained in the company's filings under the Securities Exchange Act of 1934, including, but not limited to, the Annual Report on Form 10-K for the year ended December 29th, 2007, and other filings made periodically by the company. And company undertakes no obligation to update this forward-looking information.
I'd now like to turn the call over to Dave Whalen, President and Chief Executive Officer. Please go ahead, Dave.
Thanks, Laurie. Good afternoon and thank you for joining us as we talk about our second quarter and our outlook for the remainder of the year. With me today is Kevin Mahoney, our Chief Financial Officer.
I'm pleased to say that the second quarter was another good quarter for our company. We exceeded our internal plan in a number of respects and stayed on course to deliver our expectations for the full year. During this period, it was important that within the Cross Optical Group, Costa Del Mar perform well in its peak seasons, and that progress be made on the integration of Native Eyewear into the group. Additionally, the Cross Accessory Division needed to use its non-peak season to continue its drive to prepare for the critical September to December period. Both divisions accomplished their goals.
Here are some highlights from the quarter. Revenues grew by 19% to $43.2 million. We saw increases in both the Cross Accessory Division, which was up 8% to $25.9 million and the Cross Optical Group, which grew 38% to $17.3 million. Gross margin was up slightly versus last year, rising to 56.4% from 56.1%. Operating income was up more than 70%, rising to $3.2 million from $1.9 million in the same quarter of last year. Diluted EPS were at $0.12 during the quarter, doubled the $0.06 in the same period of last year.
And importantly, inventory at the end of the quarter was in very good shape, despite the addition of nearly $1.8 million of inventory for Native Eyewear, which was acquired in late March. Our inventory was $31.1 million, $2.3 million lower than at the same time last year. This results from ongoing improvements in our supply chain management for the Cross Accessory Division.
In what we all realize was a very challenging environment during the first half of the year, AT Cross grew revenue 15%, more than doubled diluted earnings per share to $0.16 and increased operating cash flow more than $10 million. This performance is further confirmation that our strategies are sound and our execution is strong. We're off to a good start.
This is an exciting time for Cross. As I stated earlier this year, our three-year financial plan is to move from where we ended a strong 2007 to a business in 2010 that will generate over $200 million in revenue and a 10% operating margin. The majority of this growth will be organic, but we continue to have acquisition opportunities that should play a part in our success.
We have four growth strategies. First, we will grow the Cross brand in the Accessory Division by reshaping our approach to the quality writing instrument market and by developing compelling new brand extensions.
Second, we will continue to lower our Accessory Division cost structure by optimizing the state of the art manufacturing facility we had created in China and the supply chain it anchors.
Third, we will grow the Optical Group's polarized sunglass business through the Costa Del Mar and Native brands and achieve significant scale and a strong competitive position in the premium performance sunglass market.
And finally, we will utilize the strength of our balance sheet in increasing cash flows to execute smart, value-added acquisitions to strengthen each part of our business and provide us with new long-term growth opportunities.